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

US Supreme Court rules against IRS on FBAR

Article

2 Min Read

President Biden’s Proposed Budget Includes Notable Tax Provisions

Article

2 Min Read

Impacts of Adopting New CECL Rules

Article

2 Min Read

Beneficial Ownership Regulatory Requirements

Article

2 Min Read

IRS Issues Additional Warning Related to Employee Retention Credit Scams

Article

2 Min Read

Clark Schaefer Consulting Adds Managing Director, Robbie Chitwood

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.