The Internal Revenue Service and the Treasury Department have issued a set of proposed regulations on the 3.8 percent Net Investment Income Tax that takes effect next year as a result of the health care reform law, along with a FAQ page with questions and answers.
The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have certain investment income above certain threshold amounts, the IRS noted. It takes effect on Jan. 1, 2013. The threshold amount is $250,000 for taxpayers who are married filing jointly, $125,000 for taxpayers who are married filing separately, $200,000 for single taxpayers, $200,000 for a head of household with a qualifying person, and $250,000 for a qualifying widow or widower with a dependent child.
The threshold amounts are not indexed for inflation, the IRS noted. Nonresident aliens are not subject to the new tax.
Estates and trusts will be subject to the Net Investment Income Tax if they have undistributed net investment income and also have adjusted gross income over the dollar amount at which the highest tax bracket for an estate or trust begins for the taxable year. For tax year 2012, the threshold amount is $11,650. There are special computational rules for certain types of trusts, such as charitable remainder trusts and electing small business trusts, which can be found in the proposed regulations.
6 Comments
To relliot-what did they not let you post? Thanks, Bres.
Posted by: BRES | December 27, 2012 1:54 PM
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Apparently my comments are not welcomed on this site.
Posted by: relliott50 | December 11, 2012 9:33 PM
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Since we have a less than intelligent occupant of the White House, what did you expect!!
Posted by: relliott50 | December 11, 2012 9:32 PM
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I don't understand why it isn't at least indexed to inflation (not that the Fed's inflation numbers are accurate anyway), but they just created another situation similar to the AMT problem just a few years from now, especially with this extreme currency debasing.
Posted by: gene_c | December 11, 2012 12:29 PM
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The feds cannot maintain a stable currency without a lot more Govt. interaction. They have screwed things up bad enough already and you want more of their fingers in the pie! What turnip truck did you just fall off of! We need to just let the free market settle things out. Anything the Govt would do is just artificial and will not be a long term solution. That is how we got in this mess to begin with.
The only thing I see Govt doing that would be beneficial is require that personal finance courses once again be taught in ones senior year in High school. Budgeting, debt management, check book balancing, understanding of loan terms. All those practical life things that used to be taught that have been forgotten in the name of college prep classes that teach you nothing about life. Just teaches you how to study and that's it.
Posted by: ShortStuff | December 11, 2012 11:47 AM
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What the government should be doing instead is a) maintaining a truly stable currency (1913 $1.00 = 2012 $0.04) and b) exempting a base level of net investment income at least equal to per capita GDP from income taxation. We have an abysmal 4% national savings rate. Net present cost of projected federal benefits exceeds the combined net worth of all living Americans.
Posted by: rollswrangler | December 11, 2012 10:53 AM
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