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Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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I would like to thank you for your time in helping me with this issue of tackling the exclusion of my 1099-C income from this years taxes. The Form 982 that the IRS makes you file is very confusing and makes you want to beat you into submission however with your guidance I was able to quickly and easily get through it and on top of that exclude 100% of the cancellation. I will suggest your site and assistance to anyone and everyone.


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CPA discusses 2013 Medicare 3.8% Surtax Planning for IRS Tax Form 1041 | US Income Tax Return for Estates and Trusts | Medicare Surtax | Net Investment on Unearned Income tax

Form 1041 CPA Medicare Surtax

The new higher tax bracket for IRS Form 1041 kicks in at only $11,959 of Adjusted Gross Income. Here are a few planning tips. I offer a free phone consult for Estates and Trusts. (910) 399-2705.

The new 3.8% Medicare tax on “unearned” net investment income impacts 2013’s Form 1041, US Income Tax Return for Estates and Trusts. Why?

  • The Health Care and Education Reconciliation Act of 2010 kicked in on January 1st, 2013.
  • That means the 39.6% tax rate kicks in at only $11,959 of adjusted gross income for Estates and Trusts on Form 1041.
  • Capital Gains increases from 15% to 20% for Estate and Trusts when the adjusted gross income exceeds $11,959 on Form 1041.

I’ll present some tips for Form 1041 Fiduciaries and Grantors.

When does the 3.8% Medicare net investment unearned income tax factor into IRS Form 1041?

  • When the Estate or Trust’s undistributed net investment income exceeds $11,959.
  • Form 1041 has Adjusted Gross Income greater than $11,959 (2013).

What the 3.8% Medicare Surtax considers Net Investment Income

  • Interest.
  • Dividends.
  • Annuities.
  • Royalties.
  • Rents.
  • Gain secondary to sales of Estate or Trust assets.
  • Passive income.

Estate and Non-Grantor Trust Tips for IRS tax Form 1041

  • Consider distributing the Estate’s net investment income to beneficiaries in a lower tax bracket that doesn’t incur the 3.8% Medicare tax.
  • Changing the Fiduciary’s role to active instead of passive for an ongoing trade or business.

Grantor Trust Tax CPA tips for IRS tax Form 1041

Same as above. But the active role derives from the Grantor’s activities. If the Grantor passed away, a Trustee can take an active role in ongoing business issues.

I’m a Form 1041 CPA that stays sharp on Estate and Trust issues. Our virtual office allows us to serve regardless of the Estate or Trust’s location. (910) 399-2705.

Here’s an earlier IRS tax Form 1041 strategy post.

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