Exercise 12-19 (LO. 7) Compute the additional Medicare tax for the following taxpayers. If required, round your answers to the nearest dollar. c. Simon has net investment income of $38,000 and MAGI of $223,000 and files as a single taxpayer. Simon's additional Medicare tax is $fill in the blank 3.
I received the answer for exercise 12-19.
How do I find out an additional medicare tax rate 3.8% instead of 0.9%?
I see 2.9% on the Web.
Please advise,
Exercise 12-19 (LO. 7)
Compute the additional Medicare tax for the following taxpayers. If required, round your answers to the nearest dollar.
c. Simon has net investment income of $38,000 and MAGI of $223,000 and files as a single taxpayer.
Simon's additional Medicare tax is $fill in the blank 3.
---------------------------------------------------------------
Net Investment income = $38,000
MAGI = $223,000
Additional Medicare tax rate = 3.8% on net investment after the settled threshold limit
Threshold limit of additional Medicare tax = $200,000 of MAGI
|
Particular |
Amount ($) |
|
MAGI |
223,000 |
|
Less: Net investment income |
(38,000) |
|
Net MAGI |
185,000 |
Therefore the Net MAGI is below the threshold limit by = $15,000 ($200,000 - $185,000)
Net investment income = $38,000
Additional Medicare tax = (Net investment Income – Balance in threshold limit) × additional Medicare taxAdditional Medicare tax = ($38,000 –$ 15,000) × 3.8% = $874Additional Medicare tax = (Net investment Income – Balance in threshold limit) × additional Medicare taxAdditional Medicare tax = ($38,000 –$ 15,000) × 3.8% = $874
Additional Medicare tax = $874
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