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To date, there has never been a tax on investment income. Beginning January 1, 2013, most of us now realize that there will be a 3.8% net investment income tax on at least a portion of the gain when you have capital gains, ordinary interest, dividends and rental income.

Basically, individuals will owe the tax if they have Net Investment Income and also have modified adjusted gross income over the following thresholds:

 

Filing Status

Threshold Amount

Married filing jointly

$250,000

Married filing separately

$125,000

Single

$200,000

Head of household (with qualifying person)

$200,000

Qualifying widow(er) with dependent child

$250,000

 

If you are an individual who is exempt from Medicare taxes, you still may be subject to the Net Investment Income Tax if you have Net Investment Income and also have modified adjusted gross income over the applicable thresholds.

Trusts and Estates will also be affected.

– Adam Lucas, EA, RTRP

Credo Financial Services, LLC

See the IRS link for more info: http://www.irs.gov/uac/Newsroom/Net-Investment-Income-Tax-FAQs

And: http://blog.aicpa.org/2014/01/understanding-the-38-net-investment-income-tax-and-its-effects.html#sthash.BE3Iphly.dpbs

Dan Lucas
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