Net Investment Income Tax
Beginning in 2013, individuals, estates, and trusts may be subject to an additional 3.8% tax on net investment income.
Income included in net investment income:
- Interest
- Dividends
- Annuities
- Royalties
- Rents
- Income derived from a trade or business that is passive
- Income from a business trading financial instruments or commodities.
- Net capital gains (except gains on property held in a trade or business)
The income items above are then reduced by allowable deductions. Please contact us for information about these deductions.
To calculate your Net Investment Income Tax:
- Calculate by how much modified adjusted gross income exceeds the relevant threshold.
- Calculate net investment income for the year.
- Take the lesser of the amounts in step 1 or in step 2.
- Multiply the amount in step 3 by 3.8%.
Applicable thresholds:
Married filing jointly $250,000
Married filing separately $125,000
Single $200,000
Head of Household $200,000
Qualifying widow(er) with dependent child $200,000
If you think you may be subject to the Net Investment Income Tax, please contact us to appropriately plan for the cash flow implications this tax may have on you and your family.
