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Real estate professionals may also be able to avoid the net investment income tax of 3.8 percent. Taxes on royalties Royalties are income from things like copyrights, patents, oil, gas and minerals.
Had their net investment income been $300,000, then Kelly and John would pay 3.8 percent on the $250,000 by which their MAGI exceeds the income thresholds. Here, Kelly and John would pay $9,500 in ...
Net investment income (NII) is defined as the profit gained from investments after deducting certain related expenses. This includes various forms of income such as interest, dividends, rental ...
In addition, income from limited partnerships is also considered negative income. Investment portfolios and passive income are also covered by the personal income tax rules regarding the earned income tax credit.
Tax Consequences for Non-Passive Income. ... How to Avoid the Net Investment Income Tax. The Net Investment Income Tax is a 3.8% tax on certain investment income for high-income individuals.
Higher income taxpayers, as well as taxpayers with sources of income that are defined as net investment income in the statute, pay an additional 3.8% tax to offset the costs of the Affordable Care Act. [9] This tax first took effect in 2013.