Application of the 3.8% Medicare Tax on Investment Income to Distributions from Charitable Remainder Trusts and Gift Annuities

November 19, 2014
Kenneth H. Dike

The “Health Care and Education Reconciliation Act of 2010,” which amended the “Affordable Care Act,” created a 3.8% tax on net investment income received after 2012, including capital gains, for individuals with AGIs over $200,000 and those filing joint returns with an AGI exceeding $250,000. The application of this surtax to the distributions paid by charitable remainder trusts (CRTs) and gift annuities was a source of confusion throughout most of 2013 with the final regulations not published until December, 2013.

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