G real estate investment trusts and common trust

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tax purposes (e.g., Real Estate Investment Trusts and Common Trust Funds). Forbes predicts that the Net Investment Income Tax will have a substantial impact on taxpayers in the United States. Also at the beginning of this year, the Affordable Care Act called for an increase in the Medicare Tax to 0.9%. This applies to an individual’s wages, the Railroad Retirement Tax Act compensation, and self-employment income. Before this provision went into effect the rate was 2.9% with employers and employees paying 1.45% each. Now, for those individuals who earn $200,000 and above, an addition 0.9% tax will be levied. All of these amounts will be measured against a threshold which is based on an individual’s filing status (www.irs.gov). The thresholds for the tax are $250,000 for married filing jointly, $200,000 single, and $125,000 for married filing separately. An employer is responsible for withholding the Additional Medicare Tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year. The IRS has released regulations that provide that an employer must withhold additional Medicare tax from an employee’s wages. The withholding will apply only to the extent that the wages the employee earns in his employment exceed $200,000 in a calendar year. When an employer is determining if an employee’s wages exceed $200,000, the employer does not take into account the employee’s filing status or other wages or compensation that may affect the employee’s liability for the tax (www.irs.gov). Many individuals will need to submit a new Form W-4 to their employer to adjust their federal income tax withholding or make quarterly estimated tax
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payments to be sure they are not hit with an underpayment penalty when filing their income tax return each year. The Affordable Car Act will affect an individual’s Schedule A. Currently, an individual, they chose to itemize, can deduct qualified medical expenses. These include unreimbursed medical expenses, premiums paid for health insurance, payments to doctors, and many more. An individual may deduct only the amount by which his or her total medical care expenses for the year exceed 7.5% of the individual’s adjusted gross income (IRC Section 213). Starting for the tax year 2013 and going forward, the threshold amount will be increased to 10% of an individual’s adjusted gross income. This rise in the threshold amount may make it hard for some individuals to qualify for any deduction at all now. In order to alleviate the burden of a higher threshold for older taxpayers for now, if a taxpayer or the taxpayer’s spouse turned 65 between the years 2013-2016, the higher threshold amount will not be in effect for them. Their threshold will still be at 7.5% until the year 2017 when the threshold changes to 10% for everyone (www.irs.gov). A reason for this benefit for seniors for the next few years is that studies have shown that seniors aged 65 and up, claim more deductions and deduct larger amounts than younger taxpayers (www.wsj.com).
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