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Donna Williams is a single taxpayer. She has wages of $175,000. Her employer has assessed 1.45%...

Donna Williams is a single taxpayer. She has wages of $175,000. Her employer has assessed 1.45% of medicare taxes on her wages. Further in the current year she has recognized capital gains of $75,000, earned Interest Income of $6000, and has a passive loss incurred in the current tax year of $12,000. The activity causing the passive loss was not disposed of in the current year. What amount, if any, of high wage surtax and/or Net Investment Income tax does Donna owe?

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Expert Solution

Medicare surtax is not applicable as wages are less than $200,000.

Net investment income tax:

Particulars Amount Amount
Wages $        175,000
Add/(less):
Capital gains $          75,000
Interest $            6,000
Passive income $          81,000 $          81,000
MAGI $        256,000
Less: filing threshold $      (200,000)
MAGI in excess of threshold $          56,000
MAGI in excess of threshold $          56,000
Passive income $          81,000
Lesser of both $          56,000
× tax rate 3.80%
Net investment income tax $       2,128.00

Net investment income tax payable is $2,128.

ekkarill92 answered 3 years ago
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