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2013 Planning for 3.8% Medicare Surtax

From the Wealth Management Insights website: The Patient Protection and Affordable Care Act (“Act”) was signed into law by President Obama on March 23, 2010. While certain elements of the legislation have already begun to take effect, one in particular won’t begin until January 1, 2013. Still, individuals and fiduciaries alike should be mindful of the Act’s Unearned Income Medicare Contribution used to help finance the healthcare reform. The contribution takes the form of a surtax of 3.8 percent on certain types of unearned income of individuals, trusts and estates with income above specific thresholds. Furthermore, absent Congressional action, the top income tax rates are set to increase in 2013. As a result, the future top income tax rate of 39.6 percent would increase to 43.4 percent due to the surtax. In addition to ordinary income rates, the top capital gain rate is set to increase to 20 percent in 2013.

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