The 3.8% Medicare Surtax and Its Impact on Estates and Trusts

Originally aired on 6/12/13

Seminar recording | Presentation materials

The tax rate schedule for estates and trusts is extremely compressed. An estate or trust is subject to the 39.6% bracket and the 3.8% surtax once taxable income exceeds $11,950 for 2013. Estates and trusts can minimize the income and surtax by making distributions to beneficiaries who will most likely be in a lower income tax bracket and may not be subject to the surtax. This program will provide a background of the 3.8% surtax and is application to estates and trusts. Also discussed will be:

  • Definition of the adjusted gross income of an estate and trust
  • Definition of undistributed net investment income
  • The importance of allocating expenses to lower exposure to the 3.8% surtax
  • Identifying passive versus active income received by the estate of trust from flow-through entities
  • The distribution alternatives available to estates and trusts to pass income to beneficiaries
  • State income tax considerations
  • Examples of how the 3.8% surtax applies to estates and trusts