It's not too soon to start educating clients and their CPAs about the new Unearned Income Medicare Contributions Tax (UIMCT), which takes effect in 2013.

Implemented in health care reform legislation, UIMCT will impose a federal surtax of 3.8 percent on unearned income when a taxpayer's total modified adjusted gross income (MAGI) exceeds $250,000 for joint filers or $200,000 for single. For this purpose, unearned income includes interest, dividends, annuities, royalties, rents and capital gains. All dividends (qualified and ordinary) and capital gains (short-term and long-term) are treated the same for this purpose. UIMCT does not take into account tax-exempt municipal bond income and distributions from qualified plans or IRAs.

Also starting in 2010, a new 0.9 percent Medicare Hospital Insurance payroll tax (on earned income) will begin at the same income thresholds. The Tax Foundation has released a report containing useful examples, showing how high-income taxpayers will be affected by the two separate Medicare tax increases. You can access it at:

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