Problem 7-45 (LO 7-4) Respond to the following independent situations: a. Masa a
ID: 2600371 • Letter: P
Question
Problem 7-45 (LO 7-4) Respond to the following independent situations: a. Masa and Haiming, husband and wife, filing jointly, earn $259,000 in salaries and do not have any net investment income b. Masa and Haiming, husband and wife, filing jointly, earn $192,000 in salaries and $46,000 in capital gains, $46,000 in dividends, and $23,000 in savings interest for a total MAGI of $307,000. c. Masa and Haiming, husband and wife, filing jointly, earn $315,000 in salaries and $46,000 in capital gains for a total MAGI of $361,000. How much In surtax wll Masa and Halming be assessed on thelr Form 1040 for 2016? ount o surtax b. C.Explanation / Answer
1.
Surtax is charged on Net Investment Income. Since Masa an Haiming do not have Net Investment Income, No Surtax will be charged.
However medicare surtax of 0.9% in excess of $ 250000 salary will be charged as follows :
$ 9,000 x 0.90% = $81
b) Total MAGI = $325,000
Surtax is Charged on the lesser of two: Net investment Income and Excess of MAGI over Threshold Amount.
Threshold Amount for Married Filing Jointly = $250,000
Excess = $57,000 (307,000 - 250,000)
Net Investment Income = $ 115,000. It is agregate of capital gain, dividend and savings interest.
So, surtax will be charged on $57,000 at the rate of 3.8%
Surtax = 57,000 x 3.8% = $2,166
c) Excess MAGI = 361,000 - 250,000 = $111,000
Net Investment Income will be of capital gain of $ 46000
Surtax will be on lower of two i.e $ 46000
Surtax = 46,000 x 3.80% = $1,748