Tax Planning for the 3.8 Percent Medicare Tax: Tax Tip Number Five

In our previous blogs, we have been telling you about the additional 3.8% tax on investment income that will be commencing in 2013.

The tax not only applies to individuals as we have previously covered, but it also applies to estates and trusts, on the lesser of undistributed net income or the excess of the trust/estate adjusted gross income (AGI) over the threshold amount ($11,200) for the highest tax bracket for trusts and estates, and to investment income they distribute.

For eligible estates and electing trusts, you may select the proper fiscal tax year to reduce the surtax.
Example: Joan dies in January 2012. Her estate elects a November 30, 2012 year end.
Result: The surtax will not apply to her estate until the year beginning December 1, 2013, providing 11 additional months without the surtax.

Lefstein-Suchoff CPA & Associates, LLC, is here for all your tax planning & tax preparation needs. 201-947-8081 or 646-688-2807


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