Did you know the 3.8% surtax affects trusts?

The 3.8 percent surtax on net investment income (NII) is not just imposed on individuals. Under Code Sec. 1411(a)(2), trusts and estates are subject to the NII surtax on the lesser of:

• undistributed net investment income, or
• the excess of adjusted gross income over the dollar amount at which the highest tax bracket begins

What does this mean for your trust? Well the 3.8% surtax kicks in at a significantly lower amount of income than it would otherwise for an individual. The lowest threshold amount for an individual is $125,000 versus the projected 2013 trust threshold of $11,950. As you can imagine, this will affect numerous trusts and should be a concern for all trustees.

Planning has always been an essential element to minimizing your income taxes. Call us if you would like to discuss how we can help you.

About Blackman & Sloop CPAs, P.A.:

Blackman & Sloop is a full-service CPA firm headquartered in Chapel Hill, North Carolina and is actively involved in auditing, taxation, management consulting, financial planning, and related services. The firm directs a large part of its services toward providing management with advice on budgeting, forecasts, projections, financing decisions, financial analysis, and tax developments. The firm also performs review and compilation services and prepares not-for-profit, corporate, individual, estate, retirement plan, and trust tax returns as well as technology consulting services regarding installation and training on QuickBooks. Blackman & Sloop provides services in Raleigh, Durham, Chapel Hill, RTP, Hillsborough, Pittsboro, Charlotte, and the rest of North Carolina. To find out more please visit http://www.blackmansloop.com

Contact: CPA cpa@blackmansloop.com

Toll Free: 1-877-854-7530
The Exchange West
1414 Raleigh Rd, Suite 300
Chapel Hill, NC 27517