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Obama's New 3.8% Tax On Interest Income Now In Effect For 2013

Thursday, April 4, 2013 - 9:17 PM
Net Investment Income Tax (NIIT)

Some people will now hand over an extra 3.8% Federal tax on their Interest Income.  This new tax is added on to the 'normal' tax on interest income that everyone already pays on their tax return.

Per http://www.irs.gov/uac/Newsroom/Net-Investment-Income-Tax-FAQs

The extra 3.8% tax applies to those who have adjusted gross income above:
Married filing jointly $250,000

Married filing separately $125,000

Single $200,000

Head of household (with qualifying person) $200,000

Qualifying widow(er) with dependent child $250,000

There would be some risk of an underpayment penalty for 2013 if your withheld taxes and/or estimated tax payments were not adjusted accordingly.
5
waywardwayward49 posts since
Feb 17, 2011
Rep Points: 143
1. Friday, April 5, 2013 - 6:23 AM
Since Part D passed in 2003 those of us who have more income  also pay more for Medicare and for Part D. 

This is not adjusted for inflation until 2020 when it will be revisited.

Modified Adjusted Gross Income (MAGI)

Part B monthly premium amount

Prescription drug coverage monthly premium amount

Individuals with a MAGI of $85,000 or less

Married couples with a MAGI of $170,000 or less

2013 standard premium= $104 .90

Your plan premium

Individuals with a MAGI above $85,000 up to $107,000

Married couples with a MAGI above $170,000 up to $214,000

Standard premium + $42.00

Your plan premium + $11.60

Individuals with a MAGI above $107,000 up to $160,000

Married couples with a MAGI above $214,000 up to $320,000

Standard premium + $104.90

Your plan premium + $29.90

Individuals with a MAGI above $160,000 up to $214,000

Married couples with a MAGI above $320,000 up to $428,000

Standard premium + $167.80

Your plan premium + $48.30

Individuals with a MAGI above $214,000

Married couples with a MAGI above $428,000

Standard premium + $230.80

Your plan premium + $66.60

2
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
2. Friday, April 5, 2013 - 7:48 AM
Well there has to  be something beneficial about being poor.  If we brought in $250,000.00 a year, I don't think I would be in a tizzy about the extra tax.  Remember the written Word says "Pay to Caesar" and our Caesar just happens to be named Obama and he likes to share the wealth.
4
paoli2paoli21,148 posts since
Aug 10, 2011
Rep Points: 5,122
3. Friday, April 5, 2013 - 10:02 AM
sorry my charts won't post. It basically shows that every income levels pays accordingly and nothing has changed much in  2013. 
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
4. Friday, April 5, 2013 - 10:03 AM
Found this today--

  Tried to post the chart again by cut and past and it did not work on this site. Sorry. Hope Ken can fix or delete this. Do not want to use space when nothing worked. 

1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
5. Friday, April 5, 2013 - 10:09 AM
I agree with Paoli2!!
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
6. Tuesday, April 9, 2013 - 1:36 PM
Let's be specific on what the tax includes:

A 3.8% tax on unearned income which includes interest, dividends, capital gains, annuities, rental income, etc. and applies to those with adjusted gross incomes is over $250k if married or $200k if single.  One thing to note is it is the lesser of net investment income or excess adjusted gross income over the threshold. 

Here is an example:

If you are single and your adjusted gross income is $280,000, then the excess over $200,000 would be $80,000 ($280,000 minus $200,000). Assume for our example that your net investment income is $75,000. The new 3.8% tax applies to the smaller amount. In our example, $75,000 of net investment income is less than the $80,000 excess over the AGI threshold. So the 3.8% tax is applied to the $75,000 and you would have to pay an additional $2,850 for the Obama Care surtax.
1
ShorebreakShorebreak2,380 posts since
Apr 6, 2010
Rep Points: 12,706
7. Tuesday, April 9, 2013 - 2:47 PM
I thnk you meant $200,000 if single not #250,000
1
AllyAlly785 posts since
Jan 16, 2010
Rep Points: 2,281
8. Wednesday, April 10, 2013 - 8:25 AM
Re: rosie43 @ 7. Tuesday, April 9, 2013 - 2:47 PM

Thanks. My post has been updated to reflect the correction.
1
ShorebreakShorebreak2,380 posts since
Apr 6, 2010
Rep Points: 12,706
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