The Health Care Bill that Congress passed in March includes two new taxes intended to help pay for this bill.  Specifically, an extra 0.9% levy on wages for couples earning more than $250,000 ($200,000 for singles) and a new 3.8% tax on investment income on those same people (technically, people with “adjusted gross incomes” above those amounts).

Each tax signals a radical change in policy.  For workers, the extra 0.9% levy puts a progressive element in what used to be a totally flat tax.  The 3.8% tax on investment income will basically apply a “payroll” tax to unearned income.  FICA taxes for Social Security and Medicare will apply to both your wages and your investment income.

While many details remain unclear and the Internal Revenue Service hasn’t issued any guidance, here are preliminary answers to the most important questions taxpayers are asking.  Read More→