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How to Determine if the Net Investment Income Tax Applies to You

2/26/2015

 
If you have income from investments, you may be subject to the Net Investment Income Tax. You may owe this tax if you receive investment income and your income for the year is more than certain limits. Here are some key tips you should know about this tax:

• Net Investment Income Tax.  The law requires a tax of 3.8 percent on the lesser of either your net investment income or the amount by which your modified adjusted gross income exceeds a threshold amount based on your filing status.

• Income threshold amounts.  You may owe this tax if your modified adjusted gross income is more than the following amount for your filing status:
Filing Status

Single or Head of household

Married filing jointly            

Married filing separately    

Qualifying widow(er) with a child
Threshold Amount

$200,000

$250,000

$125,000

$250,000
• Net investment income.  This amount generally includes income such as:

o Interest,

o Dividends,

o Capital gains,

o Rental and royalty income, and

o Non-qualified annuities.

This list is not all-inclusive. Net investment income normally does not include wages and most self-employment income. It does not include unemployment compensation, Social Security benefits or alimony. It also does not include any gain from the sale of your main home that you exclude from your income.

Refer to Form 8960, Net Investment Income Tax, to see if this tax applies to you. You can check the form’s instructions for the details on how to figure the tax.

• How to report.  If you owe the tax, you must file Form 8960 with your federal tax return. If you had too little tax withheld or did not pay enough estimated taxes, you may have to pay an estimated tax penalty.

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  • Home
  • About
  • AutoMagical Accounting
  • Tax Stuff
    • Individuals >
      • Income >
        • Capital Gains and Losses
        • Debt Forgiveness
        • Foreign Income
        • Gambling Income
        • Unemployment
        • Other Income
      • Deductions & Credits >
        • Adoption
        • Charitable Contributions
        • Earned Income Tax Credit
        • Educational Expenses
        • Energy Tax Credits
        • Employee Business Expenses
        • Other Deductions and Credits
      • Affordable Care Act - Individuals
      • Children and Dependents
      • Death
      • Disabled Taxpayers
      • Educators
      • Health Care
      • Identify Theft
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      • Affordable Care Act - Businesses
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        • Health Insurance Premiums
        • Depreciation
        • Reimbursed Employee Business Expenses
        • Company Automobiles
      • Employment Tax Credits
      • Independent Contractors
      • Tax Credits and Deductions for Businesses
      • Other Business Topics
      • Required Business Posters
    • Amended Returns
    • IRS Notices and Problems
    • Tax Plan >
      • All About the Earned Income Tax Credit
      • 5 IRS Audit Red Flags
      • Retirement Plans for Sole Proprietors
      • Are You Claiming All of Your Tax-Deductable Business Expenses for 2015?
      • All About Past Due Tax Returns
      • Do You Need to File Form 1099s?
      • How to File an Appeal with the IRS
      • Why You Might Get a Letter from the IRS, and What to Do
      • How to File an Amended Tax Return
      • Should You Claim the Home Office Deduction?
      • How to Avoid -- And Deal with -- Identify Theft
      • Q & A: IRS Audits
      • Are You Using the Right Business Structure?
      • Starting Planning for 2015 Income Taxes Now: 5 Tips
      • What You Need to Know About Estimated Taxes
      • Contractor or Employee? How the Income Tax Obligations Differ
      • The New Form 1095-A: Reporting Health Insurance Coverage
      • Are Your Social Security Payments Taxable?
      • Do You Qualify for the Earned Income Tax Credit?
      • Are You Eligible for Health Insurance Tax Credits
      • Employee Retirement Plans - Tax Advantages and Other Benefits
      • 5 Business Tax Credits You May Be Missing
      • New Business in 2012
      • Is it a Bad Debt or a Simple Revenue Loss? Telling the Difference
      • Business Taxes Add Complexity: How Will This Affect You?
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    • Tax Calendar
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    • QuickBooks Lessons >
      • 2016 >
        • Ringing Out 2016 in QuickBooks
        • Creating Reports in QuickBooks, Part 2
        • Creating Reports in QuickBooks, Part 1
        • What Are Payroll Items in QuickBooks
        • Make QuickBooks Your Own Specify Your Preferences
        • Setting Up User Access in QuickBooks
        • Using Sales Receipts: When. How.
        • Are You Applying Finance Charges? You Should Be
        • Use QuickBooks Custom Fields to Improve Insight
        • Why You Should Use QuickBooks' Snapshots
        • What QuickBooks' Calendar Can Do for You
        • How to Add Documents in QuickBooks
      • 2015 >
        • Get Ready for 2016: QuickBooks Can Help
        • QuickBooks Reminders Prevent Problems
        • Accounting for Time in QuickBooks
        • Customize QuickBooks Forms for a More Professional Image
        • How QuickBooks Helps You Accelerate Receivables
        • Receiving Payments in QuickBooks
        • Why You Should Be Using Mobile Apps with QuickBooks
        • Preventing Data Theft in QuickBooks
        • How QuickBooks’ Custom Fields Can Provide Better Business Insight
        • Memorizing Transactions in QuickBooks: Why? How?
        • Make Your Preferences Known in QuickBooks
        • Creating Item Records in QuickBooks
      • 2014 >
        • Using Statements in QuickBooks: The Basics
        • Depositing Payments in QuickBooks: The Basics
        • Billing for Time in QuickBooks - An Overview
        • Customize QuickBooks' Reports, Make Better Business Decisions
        • 8 QuickBooks Reports That You Should Be Running Regularly
        • 5 Ways You Can Use QuickBooks' Income Tracker
        • Do You Need to Use QuickBooks' Fixed Asset Tools? The Basics
        • Spring-Cleaning Your QuickBooks Company File
        • 5 Ways to Accelerate Your Receivables in QuickBooks
        • Start Planning Now for 2014 Income Taxes
        • Make QuickBooks Yours in 2014
      • 2013 >
        • Receiving Payments from Customers in QuickBooks
        • QuickBooks 2014 Simplifies, Accelerates Common Tasks
        • Do You Need a More Robust Version of QuickBooks
        • 25 Accounting Terms You Should Know
        • QuickBooks’ Custom Fields An Overview
        • Receiving Inventory With or Without Bills in QuickBooks
        • How to Create a Progress Invoice from an Estimate
        • 10 Tips to Perfect Check-Printing in QuickBooks
        • Preparing Purchase Orders Precisely
        • Does This Icon Make Me Look Fat?
        • Use QuickBooks’ Tools -- and Common Sense Procedures -- To Prevent Financial Fraud
        • Is 2013 The Year You Finally Go Mobile With Financial Data
      • 2012 >
        • Say Good-Bye to 2012 and Ready QuickBooks for 2013
        • Are You Defining Items in QuickBooks Correctly
        • Portable Productivity - Smartphones Do Invoices, Expenses, Time, Billing
        • QuickBooks 2013 Gives You a Reason to Upgrade
        • QuickBooks Payroll Runs - Easy, Fast, Acurate
        • QuickBooks Can Do Much More Than You Think
        • QuickBooks Reports Help You Maintain Balanced Inventory Levels
        • Backup or Portable Company File? How to Decide
        • Cutting Expenses Key to Profitability, But How? Some Tips
        • Billing for Time and Expenses: How It Works
        • QuickBooks Income Tax Reports and Filtering Options: Target the Right Output
        • Modifying QuickBooks Reports Gives You Better Insight Into Past, Future
      • 2011 >
        • QuickBooks 2012: New Paths to Better, Faster Financial Management
        • Classes or Types? When to Use Them
        • Tracking Bills in QuickBooks, Worth the Effort
        • Add/Edit Multiple List Entries Simplifies Record Changes
        • Job-Tracking Adds Precision to Your QuickBooks Company
        • Are Your QuickBooks Company Files Tamper-Proof?
        • Sales Orders in QuickBooks: Why? When? How?
        • QuickBooks Helps You Make a Statement
        • QuickBooks Income Tax Reports and Filtering Options: Target the Right Output
        • Turn over a New Cliché: Adopt Best Practices
      • 2010 >
        • QuickBooks 2011 - Pump Up Your Productivity
        • Taxes 24/7/365
        • Go Back to School With QuickBooks' Educational Tools
        • Take a Vacation from Long-Term Financial Concerns: Use QuickBooks' Budgeting Tools
        • Changing Seasons, Changing Prices
        • Declare Your Independence from Security Worries: Use QuickBooks' Protection Tools
        • Hiring Summer Employees? QuickBooks Can Track Their Time
        • School's Almost Out: Teach Yourself Better Reporting
        • The Post-Tax Blues: How to Accelerate Receivables
        • Spring Cleaning: Personalize and Tidy Up Your QuickBooks Desktop
        • Getting QuickBooks Ready for Tax Preparation
        • Save Time and Reduce Mistakes by Synchronizing Your Data
      • 2009 >
        • QuickBooks 2010 Review
        • The Life of an Inventory Item
        • Customize QuickBooks Forms for a More Professional Look
        • Settle Up Fast with QuickBooks' Bill Paying Tools
        • Tune Up Your Business Plan with QuickBooks
        • Save Time for Summer by Memorizing Transactions
        • Recording Infrequent Transactions in QuickBooks
        • Getting Things Done Fast with QuickBooks Keyboard Tricks
        • 5 Ways to Audit Your QuickBooks Activity
        • 4 Ways You Can Use QuickBooks to Manage Prices in a Down Economy
        • Save Time With These QuickBooks W-2 and 1099 Tricks
      • 2008 >
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        • 7 Ways to Use QuickBooks to Manage Collections
        • Protecting Your Data at Year's End
        • QuickBooks Helps You Navigate Tricky Waters
        • Ten Overlooked QuickBooks Reports That You Should Use
        • Planning Now for Difficult Times Ahead
        • Seven Ways to Search QuickBooks
    • Buy QuickBooks
    • QuickBooks Updates and Utilities
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