The 2 New Taxes in 2013 That You May Not Know About
As of last Friday, the IRS is now accepting tax returns for the 2013 tax year. That means tax season is in full swing. As you are preparing to do your taxes or have a CPA do your taxes, there are two new taxes in 2013 that may impact you and you may not be aware of them. This blog post will discuss these two new taxes in 2013 and how they impact you.
The first of the two new taxes in 2013 is the net investment income tax. The net investment tax is a 3.8% tax on the lesser of (1) net investment income or (2) the amount the modified adjusted gross income exceeds certain thresholds. These thresholds are $200,000 for single and head of household taxpayers and $250,000 for married filing jointly taxpayers. This new tax comes from the new health insurance laws and is meant as a means to finance or pay for this new law. Net investment income consists of interests, dividends, annuities, royalties, rents, substitute interest payments, substitute dividend payments, other gross income from passive activities or the trade or business of trading in financial instruments or commodities, and net gain attributable to the disposition of property. Some of those terms of what makes up net investment income are self-explanatory, some not so much. The area that will probably trip up taxpayers is the gross income from passive activities. If you have rental real estate or passive investment income, this tax may impact you in 2013.
The second of the two new taxes in 2013 is the medicare surtax. If this tax applies to you, then you may have already been paying it and may not even know it. The 0.9% Medicare surtax uses the same income thresholds noted above, however, this tax is to be withheld by your employer as part of the payroll taxes you pay. In general, it is pretty straightforward, however, there may be instances where this tax may come into play when you file your 2013 taxes. For example, lets say you and your spouse each make $150,000. While each of you individually make less than the thresholds noted above, combined you make more than $250,000 married filing jointly threshold for the medicare surtax. Therefore, the $50,000 over the $250,000 threshold will carry the 0.9% medicare surtax that you will pay when you file your 2013 taxes.
These two new taxes in 2013 that you may not know about can have significant tax consequences if you are not prepared. So when you are preparing your taxes or having a CPA prepare your taxes, make sure you pay close attention to these two new taxes in 2013.