Our office has been receiving numerous calls regarding the new 3.8% tax to pay for the Obama Healthcare Law that was recently signed. The primary question is regarding whether you, as the client taking a distribution from your IRA, will be subject to this tax.
As you know, IRA Innovations does not provide financial advice. However, due to the number of emails and calls concerning this subject, I decided to contact our local CPA to see what he has to say about the new law and report back not only to our clients, but also to others that have this question.
Will my IRA distributions be subject to the new 3.8% tax to pay for the Obama Healthcare Law?
The answer is that if you take an IRA distribution, the 3.8% tax in and of itself is not assessed on the distribution. The tax only applies if your modified adjusted gross income, after all of your deductions and adding all passive income together, exceeds $200,000 for a single filer or $250,000 for a couple filing jointly.
Passive income includes dividends, interest, capital gains and net rental income or loss. It does not include IRA distributions, social security or earned income.
In essence, if you are concerned that you are close to meeting or exceeding the income limits, seek advice from your CPA.
Hopefully, this information will help you in your tax planning now, while you still have the time before the end of the year.
We are here to help you with your self-directed IRA needs. Feel free to contact us at www.irainnovations.com should you have any questions about contributions, distributions or any rules pertaining to what you can and cannot do in your self-directed IRA. Outside of this scope, we do not offer investment, tax, or legal advice.