Regulations Issued For New Additional Medicare & Net Investment Income Taxes
The IRS issued final regulations for the new 3.8% net investment income tax and the .9% additional Medicare surtax this week. These are new taxes effective in 2013 that became law with the Affordable Care Act’s passage in 2010.
There were a few clarifications in these Regulations from the previous Proposed Regulations issued on the net investment income tax. The areas clarified include the calculation of net investment income, treatment of certain trusts, interaction of passive activity rules with the new tax, and the method of calculating the gain or loss on the sale of a partnership or S corporation interest.
The new guidance for the additional Medicare surtax covers primarily employer-related or self-employed issues such as clarifying withholding procedures, employer liability for underwithholding, reporting and payment obligations, and claims for refunds.
This guidance will be invaluable in preparing tax returns this coming season as many of the issues clarified with the Regulations are put into practice for the first time.
