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Do Not File Your 2013 Income Tax Return Without Asking Your Tax Advisor About a “Regrouping Election” to Avoid the Obamacare 3.8% Medicare Surtax, If You Own Closely-Held Businesses or Investments

April 9, 2014 Business & Tax Blog Medicare Tax

We have previously written about a one-time income tax election opportunity that could permanently reduce your exposure to the Obamacare 3.8% Surtax. As tax-filing season comes a to a close, this is a final reminder that you must make the election on your first income tax return that implicates the Surtax. For many taxpayers, that will be their 2013 income tax returns.

Elections generally cannot be made on amended returns. The failure to make the election is automatically treated as a decision to permanently, for all future years unless your circumstances change, opt into a default classification for your businesses and investments. The default classification is unlikely to be optimal for you. It is worth the effort to get it right the first time.

Here is a link to our prior discussion regarding the election: 2013 Federal Income Tax Return “Regrouping” Election Can Permanently Reduce Exposure to the New 3.8 percent Medicare Surtax

E. John Wagner, II