If you’re an executive or other key employee, you might be rewarded with restricted stock, stock options, or nonqualified deferred compensation (NQDC). Tax planning for these forms of executive compensation is generally more complicated than for salaries, bonuses, and traditional employee benefits. And planning gets even more complicated if you could potentially be subject to two taxes under the Affordable Care Act (ACA):
1) the additional 0.9% Medicare tax, and
2) the net investment income tax (NIIT)
These taxes 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.
Additional Medicare Tax