Just when you thought you could stop worrying about taxes now that April 15 has passed, there’s another new income tax that took effect Jan. 1, 2013. To fund Obamacare, a new 3.8% tax on investment income applies to couples making more than $250,000 and singles making more than $200,000. Investment income such as dividends, capital gains and interest above the $250,000 threshold for couples is taxed at 3.8% — in addition to any other tax that might be owed.
The Wall Street Journal provides some tips on how to avoid the new tax, such as trying to minimize AMT by moving more assets into tax sheltered accounts like IRAs, harvesting losses, spreading gains over a number of years, converting assets to Roth accounts, holding investments until death and even going off-shore. The tax does not affect some investments like muni bonds, though it may affect hedge fund investments.
Welcome to the new world of higher taxes — with some nasty surprises around every corner.
