The Affordable Care Act and Your Investment Income

What you need to know

By Wade H. Mayo, President, Life Insurance Company of the Southwest, member of the National Life Group

It may not be the 30% income tax hike impacting Portugal, but many Americans will be faced with a 3.8% surtax to their investment income.  As was noted in a recent and informative U.S. News and World Report article, this surtax applies to the following income thresholds:

  • Single filers making more than $200,000
  • Married filers making more than $250,000
  • Married (filing separately) making more than $125,000
  • Trust and estates making more than $12,000

If you’re unsure about what is and is not considered investment income, here are some common items that fall into the category:

  • Passive Rental Income
  • Interest
  • Dividends
  • Capital Gains (long and short-term)
  • Annuity Withdrawals (but not while in tax-deferral)
  • Royalty Income (rights in mineral, oil, gas, etc.)

So how might you avoid having taxable income from the above sources push you over the income threshold, subjecting you to the 3.8% surtax? One strategy being used by savvy investors is to shift your investment strategy towards assets that provide more tax-efficiency and control, such as fixed, traditional or indexed deferred annuities.

This entry was posted in In the News, Personal Finance and tagged , , , , , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *