- 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
|
Threshold
Amount
|
Single
or Head of household
|
$200,000
|
Married
filing jointly
|
$250,000
|
Married
filing separately
|
$125,000
|
Qualifying
widow(er) with a child
|
$250,000
|
- Net investment income. This amount generally includes
income such as:
- Interest,
- Dividends,
- Capital gains,
- Rental and royalty income, and
- 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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