Question

A single taxpayer with modified AGI of $150,000, which includes $110,000 of salary, $25,000 of interest income, $10,000 of dividends, and $5,000 of long-term capital gains. What is her net investment income tax liability this year, rounded to the nearest whole dollar amount?

Answer 1

For a single tax payer the threshold limit of Modified Adjusted Gross Income is $200,000.

It means a Single Tax payer is liable to pay Net Investment Income tax (NIIT) at the rate of 3.8% only if his Modified adjusted Gross Income (MAGI) exceeds the threshold limit of $200,000.

In simple terms if Modified Adjusted Gross Income (MAGI) is less than threshold limit of $200,000 he is not liable to pay Net Investment Income tax.

In the given case the Modified Adjusted gross Income (MAGI) is $150,000. It means his Modifies Adjusted Gross Income (MAGI) is less than the threshold limit of $200,000 for the single taxpayer.

Since, Modified Adjusted Gross Income of taxpayer (MAGI= $150,000) is less than the Threshold limit of $200,000, the taxpayer is not liable to pay Net Investment Income Tax (NIIT).

JUST FOR YOUR UNDERSTANDING

Generally Net Investment Income Tax (NIIT) is paid on follwing incomes

1). Intrest Income,

2).Dividend Income,

3).Capital Gains,

4).Income from Passive Investments,

5).Non qualified annuity distributions,

6).Royalty and Rental Incomes.

Jope you understood the solution. If you have any doubt, please leave your doubt in the comment section so that I can clarify your doubt.

Thank you.