Get ready for new Medicare taxes

Description

Abstract: Beginning in 2013, higher-income taxpayers are scheduled to be subject to additional Medicare taxes, including a 3.8% tax on investment income. This is a dramatic departure from current Medicare taxes, which are limited to wages and self-employment income. This article explains how the new taxes will work, and defines what will and what won’t constitute investment income. It also lists strategies for reducing or eliminating the new tax. One sidebar notes that, in many cases, the taxes will have a bigger impact on married couples than on single taxpayers. Another sidebar offers a table showing how income and capital gains tax rates will change in 2013.