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Distributions From Canadian RRSPs Are Subject To #Obamacare Surtax While Distributions From US Plans Exempt

John Richardson 25

Yes, you read right.

By way of background, Obamacare was financed in part by the 3.8% Net Investment Income Tax (“NIIT”). At the risk of oversimplification, this is a tax on passive income. What those Canadians who are also “U.S. persons” need to know includes:

1. The NIIT is an instance of pure double taxation. It is believed by most practitioners that this tax CANNOT be offset by the usual foreign tax credit rules. (But, then again – maybe the NIIT is really a Social Security Tax and therefore NOT payable under the Canada U.S. Social Security Totalization Agreement.) Read more

More Net Investment Income Tax: 3.8% NIIT And The NRA-Spouse

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Taxpayers working on their 2013 tax returns are now grappling with the new 3.8% Medicare surcharge imposed on high wage earners. This tax is more commonly called the “Net Investment Income Tax” or (“NIIT”). There is a lot of confusion because the rules governing application of the NIIT contain nuances with regard to Americans working overseas and with regard to so-called nonresident alien individuals (NRA).

See my previous blog posting “NIIT-Picky Nuances For Americans Overseas Or With Offshore Investments” concerning how the NIIT impacts Americans overseas or those with offshore investments.

Broadly speaking, the NIIT is a 3.8% surtax on “net investment income” that applies to Read more

NIIT-Picky Nuances for Americans Overseas or With Offshore Investments

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If you meet the requirements, your 2013 tax return will reflect the new 3.8% Medicare surcharge imposed on high wage earners. This tax is more commonly called the “Net Investment Income Tax” or (“NIIT”). Many people are confused with the taxation of capital gains and the NIIT. There is even greater confusion because the rules governing application of the NIIT contain nuances with regard to Americans working overseas and with regard to so-called nonresident alien individuals (NRA).

Let’s start with some basics:

What is the NIIT / 3.8% Medicare Surcharge?

The NIIT is, broadly speaking a 3.8% surtax on “net investment income”. It applies only to Read more

Final Regs On The 3.8% Net Investment Income Tax

Mind-blowing price

The Accounting community was waiting for this eagerly, to see which of their recommendations had been adopted. On November 26th, 2013, the Department of the Treasury issued final regulations governing the Net Investment Income Tax (NIIT).

The 3.8% tax took effect from January 1st, 2013. It applies to individuals, estates & trusts who have Net Investment Income and Modified Adjusted Gross Income above the following threshold amounts:

• Married Filing Jointly and Qualifying Widower with Dependent Child- $250,000

• Single and Head of Household with Qualifying Person – $200,000 Read more

The Department of Treasury Issues Final Regulations Governing Net Investment Income Tax

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Introduction

On Tuesday, November 26th The Department of Treasury released final treasury regulations governing the Net Investment Income Tax (hereinafter “NIIT”) that was included in the Affordable Care Act. The 3.80% tax took effect on January 1, 2013 and applies to individuals, estates and trusts that have certain investment income above certain threshold amounts.

More specifically, individuals will owe the 3.80% tax if they have Net Investment Income and also have “Modified Adjusted Gross Income” above the following thresholds: Read more

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