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American Payroll Association (APA) Basic Guide to Payroll, 2013 Edition
It's more important than ever to be in compliance with payroll laws and regulations! How do you stay in compliance and avoid penalties? The APA Basic Guide to Payroll is written to make understanding the laws and regulations as easy as possible. And this single-volume guide is filled with tools to help you apply the law and make proper calculations – with ease!

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CCH® PAYROLL — 5/30/12

CRS explains the upcoming 3.8% medicare tax

The Congressional Research Service has issued a report explaining the upcoming 3.8% medicare tax. The Health Care and Education Reconciliation Act of 2010 (HCERA, P.L. 111-152) contains a provision that will subject certain individuals to a 3.8% “unearned income Medicare contribution” tax beginning in 2013. The tax has been labeled by some as a “home sales tax” or “real estate tax.” The tax, however, is not exclusively limited to real estate transactions. There have been proposals in Congress to repeal the tax, including H.R. 1549 and S. 1738. The report provides a summary of the tax and generalized examples of its application.

The tax will apply to single taxpayers with a modified adjusted gross income (MAGI) in excess of $200,000 and married taxpayers with an MAGI in excess of $250,000. MAGI includes wages, salaries, tips, and other compensation, dividend and interest income, business and farm income, realized capital gains, and income from a variety of other passive activities and certain foreign earned income. Taxpayers with a MAGI below these thresholds will not be subject to the 3.8% tax. For those who must pay the tax, the amount of tax owed will be equal to 3.8% multiplied by the lesser of (1) net investment income or (2) the amount by which their MAGI exceeds the above $200,000/$250,000 thresholds. Mathematically, the tax is: Tax = 3.8%×[Lesser of (MAGI − $200,000 / $250,000, or Net Investment Income)] (CRS Report R41413, The 3.8% Medicare Contribution Tax on Unearned Income, including Real Estate Transaction, May 18, 2012.)

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