Search
Close this search box.
Home / Articles / Will your investment income be subject to the new 3.8% NIIT?

Will your investment income be subject to the new 3.8% NIIT?

September 16, 2013

Share:

Under the health care act, starting in 2013, taxpayers with modified adjusted gross income (MAGI) over $200,000 per year ($250,000 for joint filers and $125,000 for married filing separately) may owe a new Medicare contribution tax, also referred to as the “net investment income tax” (NIIT). The tax equals 3.8% of the lesser of your net investment income or the amount by which your MAGI exceeds the applicable threshold.

Many of the strategies that can help you save or defer income tax on your investments can also help you avoid or defer NIIT liability. And because the threshold for the NIIT is based on MAGI, strategies that reduce your MAGI (such as making retirement plan contributions) can also help you avoid or reduce NIIT liability.

The rules on what is and isn’t included in net investment income are somewhat complex, so please contact us for more information — and to find out what tax-saving strategies may be effective in your particular situation.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

Guidance

Related Articles

Article

2 Min Read

Construction Business Owners: Two Accounting Mistakes to Avoid

Article

2 Min Read

6 Fundamentals of Not-For-Profit Financial Management

Article

2 Min Read

Not-for-Profits and Gift Card Donations: Bookkeeping Best Practices

Article

2 Min Read

Ohio State Auditor Warns to Stay Vigilant Amidst Rise in BEC Schemes

Article

2 Min Read

Spotting Charity Scams: How to Give Safely

Article

2 Min Read

Grants and Organizational Budgets for Not-for-Profits

Get in Touch.

What service are you looking for? We'll match you with an experienced advisor, who will help you find an effective and sustainable solution.

  • Hidden
  • This field is for validation purposes and should be left unchanged.