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Wealthy To Pay 3.8 Percent Surcharge On Capital Gains, Dividends
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Wealthy To Pay 3.8 Percent Surcharge On Capital Gains, Dividends

http://www.huffingtonpost.com/2012/12/04/obamacare-investment-income-tax_n_2236687.html?icid=maing-grid10%7Chtmlws-main-bb%7Cdl23%7Csec1_lnk2%26pLid%3D241071


ASHINGTON, Dec 3 (Reuters) - The U.S. Internal Revenue Service has released new rules for investment income taxes on capital gains and dividends earned by high-income individuals that passed Congress as part of the 2010 healthcare reform law.

The 3.8 percent surtax on investment income, meant to help pay for healthcare, goes into effect in 2013. It is the first surtax to be applied to capital gains and dividend income.

The tax affects only individuals with more than $200,000 in modified adjusted gross income (MAGI), and married couples filing jointly with more than $250,000 of MAGI.

The tax applies to a broad range of investment securities ranging from stocks and bonds to commodity securities and specialized derivatives.

The 159 pages of rules spell out when the tax applies to trusts and annuities, as well as to individual securities traders.

Released late on Friday, the new regulations include a 0.9 percent healthcare tax on wages for high-income individuals.

Both sets of rules will be published on Wednesday in the Federal Register.

The proposed rules are effective starting Jan. 1. Before making the rules final, the IRS will take public comments and hold hearings in April.

Together, the two taxes are estimated to raise $317.7 billion over 10 years, a ccording to a Joint Committee on Taxation analysis released in June.

To illustrate when the tax applies, the IRS offered an example of a taxpayer filing as a single individual who makes $180,000 in wage income plus $90,000 from investment income. The individual's modified adjusted gross income is $270,000.

The 3.8 percent tax applies to the $70,000, and the individual would pay $2,660 in surtaxes, the IRS said.

The IRS plans to release a new form for taxpayers to fill out for this tax when filing 2013 returns.

The new rules leave some questions unanswered, tax experts said. It was unclear how rental income will be treated under the new rules, said Michael Grace, managing director at Milbank, Tweed, Hadley & McCloy LLP law firm in Washington.

"The proposed regulations surely will increase tax compliance burdens for individuals," said Grace, a former IRS official. "There's clearly some drafting left to be done."
7 Comments
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Avatar_f_tn
Another link describing similar

http://www.fairobserver.com/article/understanding-president-obama%E2%80%99s-revenue-targets
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Avatar_f_tn
I knew this was going to happen but I did not know it was to go into effect this January. Tells ya where my head has been I guess!
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973741_tn?1342346373
Well, it tells me that you (nor I) are one of the folks that will have the increase in taxes.  >)  I was reading that one of the things they are talking about with this issue going on in congress is taking the taxes from 15% to 38% (I can't remember the exact percentage but high 30's) which I do have a problem with.  That is a big jump.  Most could live with small jumps up like 3.8%.  (I'm guessing).  
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1530342_tn?1405020090
"Well, it tells me that you (nor I) are one of the folks that will have the increase in taxes.  >)"

Me either...lol

"Together, the two taxes are estimated to raise $317.7 billion over 10 years, a ccording to a Joint Committee on Taxation analysis released in June.

To illustrate when the tax applies, the IRS offered an example of a taxpayer filing as a single individual who makes $180,000 in wage income plus $90,000 from investment income. The individual's modified adjusted gross income is $270,000.

The 3.8 percent tax applies to the $70,000, and the individual would pay $2,660 in surtaxes, the IRS said."

I see this as a good thing....Anyone disagree? I'm really curious. (not trying to start anything fresh....)
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480448_tn?1403547723
The example given seems reaonsable enough.  Honestly, when I start seeing numbers, and %, my brain swells up.  I freaking hate math.

But, just the example above, it seems pretty fair.  317 billion over ten years though seems like a really small amount, doesn't it?  Anything is helpful, sure...but it seems like this is small potatoes?

Again, me and math don't always get along,...so take that into consideration when reading my post.  ;0)
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1310633_tn?1289313024
You hit the nail on the head.

Even with a tax-hike of whatever%, it's still only a drop-in-the-bucket.

We don't have a revenue problem, we have a SPENDING problem.

But we'll look at that next year...
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973741_tn?1342346373
Well, it is easy for me to say sure, it's fine because it doesn't affect me right now.  

But the worry I have is for those nearing retirement age that saved saved saved and they bumped themselves over that 250,000 mark.  And then this is the money they plan on living on entirely upon retirement.  They now will have less.  

Now, I guess that would mean that these retired folks would have to have more earned income than 250,000 a year which certainly seems like plenty to live on and pay the full tax so I guess it is okay.  

But if it is just taxing investment accounts and all money that comes out of them once the person/couple has 250,000 invested---  then that is not good in my opinion.  

Whew, clearly do not have a finance degree.  LOL
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