Medicare Surtax - Ask TaxGuru

#1;Is this tax applicable to an individual who has retired and has no "earned income" (but may have social security benefits and/or net investment income)?

Answers:-

#1; Beginning in 2013, higher-income taxpayers will be subject to an additional tax on earned income and a new 3.8% tax on investment income; An additional 0.9 percent Medicare tax is imposed on wages, compensation and self-employment earnings above a threshold amount,.Medicare wages and self-employment income are combined to determine if income exceeds the threshold. A self-employment loss is not considered for purposes of this tax. RRTA compensation is separately compared to the threshold.

#2;If yes, how will this tax be paid since there is no earned income (hence no tax witholding from wages)?

Answers:-

#2;This tax, the unearned income Medicare contribution tax (UIMCT), is equal to 3.8% of the lesser of: (1) Your net investment income (generally, net income from interest, dividends, annuities, royalties and rents, capital gains and income from a business that is considered a passive activity) or (2) yourMAGI

#3;What if the same individual is married and his spouse has earned income. Will the surtax be applicable only only the spouse?

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