What Is Net Investment Income Tax?
Capital, Not Labor And Other Takeaways From A VShaped Recovery from www.financialsamurai.com Net investment income tax (NIIT) is a type of tax imposed by the Internal Revenue Service (IRS) on certain types of income earned by individuals, estates and trusts. This tax was created by the Affordable Care Act and went into effect on January 1, 2013. The NIIT is a 3.8% tax imposed on the lesser of an individual's net investment income or their modified adjusted gross income (MAGI) above the applicable threshold. It is important to note that the NIIT is not a deduction but an additional tax. Who Pays the Net Investment Income Tax? The NIIT applies to individuals, estates and trusts, with a few exceptions. Single filers with MAGI of more than $200,000 and married couples filing jointly with MAGI more than $250,000 will have to pay the NIIT. This means that individuals with MAGI below these amounts are not subject to the NIIT. In addition, charitable organizations, certain self-employe...