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New CCH Tax Briefing Examines IRS Guidance on Medicare Contribution Taxes
(RIVERWOODS, ILL., December 7, 2012) – The IRS has issued long-awaited and much-needed proposed regulations addressing many of the uncertainties around the new Medicare contribution taxes coming into effect in 2013. Providing insight on the proposed regulations, CCH has issued a new Tax Briefing: Analysis of Post-2012 Net Investment Income Tax and Additional Medicare Tax.
The timely CCH briefing provides coverage of the IRS proposed reliance regulations addressing two new surtaxes: the 0.9 percent Additional Medicare Tax on earned income and the 3.8 percent Medicare contribution tax on Net Investment Income (NII).
Both surtaxes are scheduled to spring into full effect on January 1, 2013. The proposed reliance regulations and related FAQs seek to address many of the gaps in application of these surtaxes that have been questioned by tax professionals, employers and taxpayers. At the same time, the proposed reliance regulations create new questions about application of the surtaxes.
The guidance on each of these new surtaxes is extensive and is immediately critical for affected taxpayers. While the regulations are not expected to be finalized until well into 2013 for the 2014 tax year, the IRS stated that taxpayers may rely on the proposed regulations for compliance purposes for 2013.
“Immediate action is advisable on a number of fronts,” said CCH Principal Federal Tax Analyst, Mark Luscombe, JD, LLM, CPA. “Year-end tax planning may indicate the need to accelerate income otherwise subject to one or both of the surtaxes. Employers may need to adjust their payroll practices immediately for certain employees on January 1, 2013. Investment strategies and asset allocations may need revisiting, as may use of deferred compensation plans, and elections pursuant to the proposed NII regulations should be considered.”
Complicating planning even further is uncertainty over the fate of the Bush-era tax cuts after 2012: sunset of those rates for higher-income taxpayers starting in 2013 could mean a combined income and NII surtax rate as much as 43.4 percent on investments, and an additional 0.9 percent in Additional Medicare Tax on top of a possible 39.6-percent rate on wages and other income.
The new CCH tax briefing is available by clicking here: Analysis of Post-2012 Net Investment Income Tax and Additional Medicare Tax. Access to the full range of CCH Special Briefings on significant tax developments is at CCHGroup.com/Legislation.
Members of the press interested in speaking to a CCH tax analyst should contact Leslie Bonacum at 847-267-7153, firstname.lastname@example.org or Brenda Au at 847-267-2046, email@example.com
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading global provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals since 1913. Among its market-leading solutions are The ProSystem fx® Suite, CorpSystem®, CCH® IntelliConnect®, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill. Follow us now on Twitter @CCHMediaHelp. Wolters Kluwer (www.wolterskluwer.com) is a market-leading global information services company. Wolters Kluwer is headquartered in Alphen aan den Rijn, the Netherlands. Its shares are quoted on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.