Home / Articles / Your exec comp could be subject to the 0.9% additional Medicare tax or the 3.8% NIIT

Your exec comp could be subject to the 0.9% additional Medicare tax or the 3.8% NIIT

October 14, 2015

Share:

The additional Medicare tax and net investment income tax (NIIT) apply when certain income exceeds the applicable threshold: $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for other taxpayers.

The following types of executive compensation could be subject to the 0.9% additional Medicare tax if your earned income exceeds the applicable threshold:

•    Fair market value (FMV) of restricted stock once the stock is no longer subject to risk of forfeiture or it’s sold
•    FMV of restricted stock when it’s awarded if you make a Section 83(b) election
•    Bargain element of nonqualified stock options when exercised
•    Nonqualified deferred compensation once the services have been performed and there’s no longer a substantial risk of forfeiture

And the following types of gains from exec comp will be included in net investment income and could be subject to the 3.8% NIIT if your modified adjusted gross income (MAGI) exceeds the applicable threshold:

•    Gain on the sale of restricted stock if you’ve made the Sec. 83(b) election
•    Gain on the sale of stock from an incentive stock option exercise if you meet the holding requirements

Concerned about how your exec comp will be taxed? Please contact us. We can help you assess the potential tax impact and implement strategies to reduce it.

© 2015

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

Guidance

Related Articles

Article

2 Min Read

Clark Schaefer Hackett Names Kyle Shumate as Chief Marketing Officer

Article

2 Min Read

How the Inflation Reduction Act Is Extending and Expanding Solar Energy Tax Incentives

Article

2 Min Read

Year-End Tax Planning: Act Now to Reduce Your 2022 Tax Bill

Article

2 Min Read

Is Your Business Tracking R&E Expenses in Preparation for New Section 174 Amortization Rules?

Article

2 Min Read

The Inflation Reduction Act Extends Energy Efficiency Building Incentives

Article

2 Min Read

Inflation Reduction Act Expands Valuable R&D Payroll Tax Credit

Get in Touch.

What service are you looking for? We'll match you with an experienced advisor, who will help you find an effective and sustainable solution.
  • Hidden
  • This field is for validation purposes and should be left unchanged.