Olivia,a single taxpayer,has AGI of $280,000 which includes $220,000 of salary and $60,000 of investment income.She will pay Medicare tax on the $60,000 of investment income of
A)$0.
B)$2,280.
C)$9,000.
D)$870.

Question

Quizplus · Accepted Answer

Olivia will pay a 3.8% Medicare tax on the lesser of her net investment income or the excess of her AGI over the threshold amount of $200,000 for single taxpayers. Since her net investment income is $60,000 and her excess AGI is $80,000 ($280,000 AGI - $200,000 threshold), she will pay Medicare tax on the $60,000 of investment income, which comes out to be $2,280 ($60,000 x 3.8%). Therefore, the correct answer is B.

Olivia,a Single Taxpayer,has AGI of $280,000 Which Includes $220,000 of Salary