Question

daunte and shanice are married taxpayers filing a joint tax return. in 2023, their adjusted gross income (agi) is $360,000, and their investment income (included in the agi) is $100,000. they have an investment interest expense of $7,000 and $5,000 of state income taxes attributable to the investment income. what is the amount of medicare contribution tax they must pay?

Answer 1

Daunte and Shanice must pay $3,800 as their Medicare contribution tax.

Step-by-step explanation:

To calculate the amount of Medicare contribution tax Daunte and Shanice must pay, we need to determine if they are subject to the tax and then calculate the tax amount. The Medicare contribution tax is a 3.8% tax on net investment income for married taxpayers filing jointly with a modified adjusted gross income (MAGI) over $250,000. The tax is calculated as 3.8% of the lesser of their net investment income ($100,000) or the excess of their MAGI over the threshold ($360,000 - $250,000 = $110,000).

In this case, their net investment income of $100,000 is lower than the excess of their MAGI over the threshold. Therefore, their Medicare contribution tax would be 3.8% of $100,000, which is $3,800.