Advice on Income Tax Preparation in Chandler and Phoenix, AZ



By Jeffrey Brooks, CPA, CFP, MBA for JBrooks Wealth Advisors, PC, a Professional CPA and CFP Firm  602-292-2009  Please consult with your professional tax CPA regarding your specific circumstances!



To you the reader:  If you are married and have adjusted gross income of OVER  $250,000  and part of this income is from “passive activities” like interest income, dividend income, capital gains, partnership or S corporation investment income where you spend less than 500 hours a year, there is an  Medicare tax  of 3.8%.  Simple example for a married couple:

Dick and Jane’s tax situation:

“passive income” (means non-active income) like interest, dividend, capital gains and investments in businesses you don’t spend 500 hours per year.   $50,000


Non-passive income (means active income)  like W-2 payroll and income from your business is $100,000. Why is it considered active? Because it is from your work as an employee and your work as a business owner where you spend at least 500 hours in  your business.

Non-passive income (means non-active income)  Why is the income considered not active income?  Because you do not work over 500 hours in this business.

So, the $50,000 could all be subject to this new Form 8960 Medicare tax of 3.8%.  What is interesting is this Medicare tax does not help the underfunded Medicare system.

So one of our goals is to reduce the adjusted gross income down to $250,000 or lower so no 3.8% medicare tax will be charged!

For the previous year’s tax,  it is too late to go back and reduce adjusted gross income down so the medicare tax would not apply but we can reduce the current years medicare tax.

For the current year, most likely can reduce the passive income since the business is on a cash basis.

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009