Financial Friday: Medicare Surtax

Happy Friday!  This article is a little obscure as it affects less than 5% of taxpayers, but it is helpful to understand in the grand scheme of the ACA.  The Medicare Surtax was a tax created to help pay for the ACA and the surtax is 0.9% above the Medicare rate.  In short, the surtax applies to the lesser of MAGI above a MAGI threshold or your net investment income (NII).  So, if you make $300k a year but only make $1 in NII, your medicare surtax will be basically nothing.  Here is a really good article I found that describes the surtax and provides different examples:

https://www.fidelity.com/viewpoints/personal-finance/new-medicare-taxes

One thing to keep in mind is that employers are required to start withholding the surtax once your income reaches $200k.

As always, please contact if you have any questions regarding any of my posts.  I am not a tax expert but I can recommend someone who can help you minimize your taxes and/or prepare your taxes.  More to come…

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