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PostHeaderIcon Stop by Our Tax Store in Commerce, MI

We’re going retail and we opened a tax storefront called Tax Drop.  It’s located in Commerce, MI but it’s located right on the borders of Waterford, West Bloomfield and White Lake.  With convenient drop off service and three different pricing options, we hope to make it even easier for our clients to get their taxes prepared this year.  Stop by and see us.  For a map and our address and phone number, just click on this link.

PostHeaderIcon New Content Coming Soon

With the 9/15 deadline behind me and the 10/15 deadline winding down, you’ll be seeing more original content next week.  I plan on continuing to write about some of the tax ramifications of buying or selling a business, but if you have a topic you’d like to discuss, just send me an email or leave a comment.

PostHeaderIcon Tax Planning for 2013 – Medicare Tax on Unearned Income

While we have a number of expiring tax provisions, we also have a few new ones.  This one is courtesy of the 2010 Health Care bill (Obamacare) and it puts into place a medicare tax on unearned income which starts 1/1/2013.  The tax rate is 3.8% and it’s on the lower of the persons’ net investment income or their modified adjusted gross income over a certain limit.  Investment income includes interest, dividends, capital gains, annuities, royalties, rents and pass through income like income from K-1’s from S-Corporations and partnerships.

The modified AGI limits are $250,000 for married filing jointly and qualified widows or widowers, $200,000 for head of household and single tax payers and $125,000 if you file married filing separately.  Finally, if you’re an employee and your salary is over those threshold amounts, you get hit with an additional medicare tax of 0.9% which brings it up to the tax on unearned income of 3.8%.

What’s interesting is they’re creeping into making S-Corporation income subject to payroll taxes.  You have to be over the threshold but once you’re over, it makes the difference between a salary and a distribution a little bit less enticing.