A 3.8% surtax on investment income began in 2013 as part of the health care overhaul in 2010 and applies to couples with Adjusted Gross Income over $250,000 (or singles over $200,000). The tax applies to items of investment income, such as dividends, rents, interest and capital gains for those making over the threshold amount. For example, a couple with $250,000 of income from a medical practice plus $100,000 in capital gains would have a surtax of $3,800 applied to their capital gains, in addition to the rate that is then in effect.

The final regulations on the application of the investment surtax have not been adopted and many questions remain unanswered. Those who anticipate substantial gains from the sale of a business or a property should investigate planning techniques to accelerate, shift or convert investment income to take advantage of current low rates.

See “Get Ready For The New Investment Tax”