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Generally, Net Investment Income will include interest, dividends,capital gains, annuities,royalties and rents and other income attributable to passive activities.
Gains on the sale of property not used in an active business and income from the investment of working capital are treated as investment income.
Net Investment Income is gross income or net gain reduced by deductions allocated to the income or gain.
It does not include distributions from qualified plans,401(k) plans, IRS's, and eligible 457 plans or municipal bond interest or life insurance proceeds.
The tax will not apply to the first $250,000 on profits from the sale of a personal residence, or to the first $500,000 in the case of a married couple selling their home.

The 3.8% tax on Investment income will fall on individuals with an (AGI) adjusted gross income above $200,000 and couples filing a joint tax return with more than $250,000 AGI.
The calculation will be the LESSER of the Investment income amount OR the Excess of AGI over the $200,000 or $250,000 thresholds.

The .9% (0.009) tax is imposed ONLY on the excess of Earned Income above the threshold amounts. The threshold amounts for individuals is $200,000 and $250,000 on a joint tax return.
Generally, Earned Income is money you earned on your labor such as wages, salaries, commissions. It includes wages and self-employment income

Only a small percentage of home sellers will pay the 3.8% surtax. Only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. The tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.
The tax calculation will be the LESSER of the Investment income amount OR the Excess of AGI over the $200,000 or $250,000 thresholds x 3.8%.

Beginning in 2013, the threshold for deducting medical expenses as an Itemized Deduction will increase from 7.5% of Adjusted Gross Income (AGI) to 10% of AGI.
Taxpayers who are 65 and older, however, are granted an exception, and will still be able to deduct medical expenses that exceed 7.5% of their AGI.
The exception for taxpayers 65 and older will continue through 2016, and all taxpayers will be subject to the 10% threshold in 2017.

The annual gift tax exclusion increases to $14,000 in 2013, up from $13,000 in 2012.

The amount used to reduce the net unearned income reported on a childs tax return subject to the kiddie tax has increased to $1,000, up from $950 in 2012.

The foreign earned income exclusion rose to $97,600 up from $95,100 in 2012.

Complete and file S Corporation Federal election form Form 2553, no more than two months and 15 days after the beginning of the tax year the election is to take effect, or
At any time during the tax year preceding the tax year it is to take effect.
Most states require a state election form in addition to the federal election form to be filed.
For this purpose, the 2 month period begins on the day of the month the tax year begins and ends with the close of the day before the numerically corresponding day of the second calendar month following that month. If there is no corresponding day, use the close of the last day of the calendar month.

A late election to be an S corporation generally is effective for the tax year following the tax year beginning on the date entered on line E of Form 2553. However, relief for a late election may be available if the corporation can show that the failure to file on time was due to reasonable cause.
To request relief for a late election when the tax year beginning on the date entered on line E ends on or after December 31, 2007, a corporation that meets the following requirements can explain the reasonable cause in the designated space on page 1 of Form 2553.
The corporation fails to qualify to elect to be an S corporation (see Who May Elect on page 1) solely because of the failure to timely file Form 2553.
The corporation has reasonable cause for its failure to timely file Form 2553.
The corporation has not filed a tax return for the tax year beginning on the date entered on line E of Form 2553.
The corporation files Form 2553 as an attachment to Form 1120S no later than 6 months after the due date of Form 1120S (excluding extensions) for the tax year beginning on the date entered on line E of Form 2553.
No taxpayer whose tax liability or tax return would be affected by the S corporation election (including all shareholders of the S corporation) has reported inconsistently with the S corporation election on any affected return for the tax year beginning on the date entered on line E of Form 2553.
Similar relief is available for an entity eligible to elect to be treated as a corporation (see the instructions for Form 8832) electing to be treated as a corporation as of the date entered on line E of Form 2553. For more details, see Rev. Proc. 2007-62, 2007-41 I.R.B. 786.
To request relief for a late election when the above requirements are not met, the corporation generally must request a private letter ruling and pay a user fee in accordance with Rev. Proc. 2008-1, 2008-1 I.R.B. 1 (or its successor). However, the ruling and user fee requirements may not apply if relief is available under the following revenue procedures.
If an entity eligible to elect to be treated as a corporation (a) failed to timely file Form 2553, and (b) has not elected to be treated as a corporation, see Rev. Proc. 2004-48, 2004-32 I.R.B. 172.
If a corporation failed to timely file Form 2553, see Rev. Proc. 2003-43, 2003-23 I.R.B. 998.
If Form 1120S was filed without an S corporation election and neither the corporation nor any shareholder was notified by the IRS of any problem with the S corporation status within 6 months after the return was timely filed, see Rev. Proc. 97-48, 1997-43 I.R.B. 19.