Section 1411 Unearned Net Investment Tax Subject to Estimated Payments

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Practitioners and taxpayers should note that a 3.8 percent tax on unearned net investments and income under tax code Section 1411 may be subject to estimated payments, but not wage or income withholding, an IRS official says. Practitioners should account for any of their clients' income that may be subject to the tax and plan accordingly, making estimated payments throughout the year to avoid being hit at year-end with penalties, says Adrienne Mikolashek, an attorney adviser with IRS's Office of Associate Chief Counsel. The burden is on the individual taxpayer, trust, or estate to watch out for this tax, Mikolashek says.

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