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Old 01-02-2019, 01:31 PM
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Net Investment Income Tax (NIIT) and Ordinary dividends

I'm aware and understand that Capital gains tax can be taxed at 20% + 3.8% due to NIIT.

Is it true that NIIT (Net Investment Income Tax) can result in somebody having to pay taxes at higher than highest tax bracket (39.6% I believe) on ordinary dividends which, for such a person, will be taxed at 39.6% anyway without NIIT?

Thanks



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Old 01-03-2019, 07:31 PM
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I'm aware and understand that Capital gains tax can be taxed at 20% + 3.8% due to NIIT.==============>> The Net Investment Income Tax applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts.

Is it true that NIIT (Net Investment Income Tax) can result in somebody having to pay taxes at higher than highest tax bracket (39.6% I believe) on ordinary dividends which, for such a person, will be taxed at 39.6% anyway without NIIT========>>for an individual. TP, the NIIT is 3.8 % on the lesser of:
? the net investment income, or
? the excess of modified adjusted gross income over the following threshold amounts:
o $250k for married filing jointly or qualifying widow(er)
o $125k for married filing separately
o $200k in all other cases



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Old 01-03-2019, 09:38 PM
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Yes, I'm aware of these rules. I just wanted confirmation on whether this translates to somebody having to pay taxes at higher rate than their tax bracket. In other words, people in highest tax bracket 39.6% can end up paying taxes @ 39.6 + 3.8 = 43.4%. Can somebody please confirm?

Thanks



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Old 01-04-2019, 09:52 AM
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Quote:
Originally Posted by TaxTeacher View Post
Yes, I'm aware of these rules. I just wanted confirmation on whether this translates to somebody having to pay taxes at higher rate than their tax bracket. In other words, people in highest tax bracket 39.6% can end up paying taxes @ 39.6 + 3.8 = 43.4%. Can somebody please confirm?

Thanks
yes aslongas when a taxpayer?s MAGI exceeds a threshold amount



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Old 01-04-2019, 11:01 AM
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Thank you!

That clears my, up to now, false understanding that 39.6% was the absolute highest tax rate.



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