By: Andrew Shamp, Guest Contributor
If you had investment income in 2013, there may be something in your recently filed tax return that you weren’t expecting – an additional 3.8% tax. For individual taxpayers with adjusted gross income (“AGI”) over $200,000 and joint filing taxpayers with adjusted gross income above $250,000 the Affordable Care Act created an additional tax on investment income of 3.8%. The tax is levied on the lesser of 1) net investment income, and 2) the amount by which their AGI exceeds the threshold limit of $200,000 or $250,000 respectively. Investment income specifically includes gross income from interest, dividends, annuities, royalties, and rents. Investment income does not include distributions from qualified retirement plans, IRAs, gain on the sale of certain business interests, active trade or business income, or any income taken into account for self-employment tax purposes. The surtax became effective after December 31, 2012.Continue reading