Net Investment Income Tax Rules for 2013


When planning your tax return for 2013, consider your income from the investments you have made and the amount of taxes you will need to pay on it. A tax of 3.8% is charged on net investment income if your modified adjusted gross income is not beyond the threshold amount of your filing status. Your net investment income is the income after you have subtracted all your deductions from it.

Types of Investment Income

An income is said to be from an investment if it is:

•           Income from Interest
•           Dividends
•           Capital gains
•           Rental income
•           Royalty income
•           Non-qualified annuities

Not Investment Income

Usually, net investment income does not include wages and most self-employment income. Also, income from the sources quoted below is not included in calculated net investment income.

•           Unemployment compensation
•           Social Security benefits
•           Alimony
•           Gain on the sale of your main home that you exclude from your income

Income threshold


You may owe tax if you have net investment income and 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

If you owe the net investment income tax (NIIT), you will need to file Form 8960 and report on line 60 of Form 1040 when filing taxes in 2014.
 


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