Issue link: https://viewer.e-digitaledition.com/i/89851
3.8% Medicare Tax: Facts and Fiction By Diane M. Burge, CPA T HERE HAS BEEN an e-mail cir- culating warning homeowners that if they sell their residence after January 2013, they will be charged a surtax of 3.8% due to The Patient Protection and Affordable Care Act (PPACA). As literally stated, this is fiction; however, there are many facts about the surtax of which you should be aware. The surtax will not apply unless your modified adjusted gross income (MAGI) exceeds $200,000 if you are unmarried or $250,000 for those who are married filing jointly. For those who are married filing separately, the threshold is $125,000 per individual so you'll need to pay closer attention to analyzing your filing status and unearned income for each spouse. For those with MAGI above these levels, the surtax will apply to the lesser of your net investment income or the amount of MAGI above the threshold. Net investment income includes rents, royalties, annuities, interest, dividends, passive activity income and capital gains. If you sell your home, presuming it's your principal residence, the first $250,000 of Want a healthier practice? Call us for a check-up. For more than 30 years, physicians have called on the CPAs at Weidrick, Livesay, Mitchell & Burge to achieve their potential and remain successful. Our physician-focused business and accounting practices can help you • control your overhead • optimize your collections • minimize your personal and corporate taxes • plan for retirement • shelter and transfer wealth If you want a healthier, more viable practice, call us today. See what we can do for you. 330.659.5985 (Akron) • 330.722.5249 (Medina) 2150 N. Cleveland-Massillon Rd, Akron NOVEMBER-DECEMBER 2012 s MDNEWS.COM s MD NEWS Cleveland/Akron/Canton | 37 gain for single individuals and $500,000 for a married couple is exempt from tax. Therefore, only gain in excess of this would be added to your other income to determine your MAGI for purposes of the surtax. In the real world of our local housing market, the imposition of any surtax on the sale of your residence would be unlikely. The added surtax for higher earners on investment income, however, is pretty sizable; particularly when added to higher taxes on interest, dividends and capital See Page 38