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Are You Subject to the Net Investment Income Tax?

Besides regular income tax, individual taxpayers are liable for a 3.8% Net Investment Income Tax on the lesser of (a) their net investment income, or (b) the amount by which their modified adjusted gross income exceeds a statutory threshold amount based on their filing status. 

The statutory threshold amounts are:

  • Married filing jointly — $250,000,

  • Married filing separately — $125,000,

  • Single or head of household — $200,000, or

  • Qualifying widow(er) with a child — $250,000.

In general, net investment income includes, but is not limited to: interest, dividends, capital gains, rental and royalty income, and non-qualified annuities.

Net investment income does not include wages, unemployment compensation, Social Security Benefits, alimony, retirement plan distributions and self-employment income.

To schedule a meeting for tax planning contact me today.

Richard Pon CPA, CFP