Are you carrying some big capital gains in your investment account? Thinking about selling your house at a gain soon?
You might want to consider the effect of the 3.8% Medicare Surtax included in the Patient Protection and Affordable Care Act before the tax kicks in next year.
The 3.8% tax applies to investment income for single taxpayers with modified adjusted gross income exceeding $200,000, or $250,000 for married taxpayers.
Net investment income includes income from any of the following:
- Interest, dividends, royalties, annuities, rents
- Net capital gains derived from the disposition of property
- Income from passive activities
- Trading financial instruments and commodities
Timing of harvesting capital gains could be critical in tax savings strategies this year. If you think this tax might apply to you then you should initiate a discussion with your tax adviser prior to year-end.