Starting in 2013, individuals, estates and trusts may be subject to the Net Investment Income Tax (NIIT). NIIT is surtax of 3.8% which is applied to the lesser of:
- Modified Adjusted Gross Income (MAGI) above the threshold amount [Married filing jointly $250,000; Single/Head of Household $200,000; Married filing separately $125,000] or
- Net Investment Income (NII).
The tax planning and compliance issues surrounding the NIIT are very complex. The IRS has just recently updated its NIIT Frequently Asked Questions page. It can be found at: http://www.irs.gov/uac/Newsroom/Net-Investment-Income-Tax-FAQs. Continue reading Net Investment Income Tax