笨Ben的部落格

What is U.S. Net Investment Income Tax?

The net investment income tax is a 3.8% surtax applies to individuals, estates, and trusts that have modified adjusted gross income (MAGI) above applicable threshold amounts. It is generally paid by high earners with significant investment income.

In general, net investment income for purpose of this tax, includes, but is not limited to:

• interest, dividends, certain annuities, royalties, and rents (unless derived in a trade or business in which the NIIT doesn't apply),
• income derived in a trade or business which is a passive activity or trading in financial instruments or commodities, and
• net gains from the disposition of property, other than property held in a trade or business to which NIIT doesn't apply.

For individual, the NIIT is 3.8 percent on the lesser of:

• the net investment income, or
• the excess of modified adjusted gross income over the following threshold amounts:

$250,000 for married filing jointly or qualifying widow(er)

$125,000 for married filing separately

$200,000 in all other cases

In the case of an estate or trust, the NIIT is 3.8 percent on the lesser of:

• the undistributed net investment income, or
• the excess (if any) of the adjusted gross income over the dollar amount at which the highest tax bracket begins for an estate or trust for the tax year. (For estates and trusts, the 2020 threshold is $12,950)

Modified adjusted gross income (MAGI), for purposes of the NIIT, is generally defined as adjusted gross income (AGI) for regular income tax purposes increased by the foreign earned income exclusion (but also adjusted for certain deductions related to the foreign earned income).

Taxpayers use Form 8960, Net Investment Income Tax Individuals, Estates, to figure the amount of their net investment income tax (NIIT). Individuals report this tax on Form 1040, estates and trusts report this tax on Form 1041.

Reference: https://www.irs.gov/forms-pubs/about-form-8960

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