Tag Archive for Form 8960

More Net Investment Income Tax: 3.8% NIIT And The NRA-Spouse

Taxpayers working on their 2013 tax returns are now grappling with the new 3.8% Medicare surcharge imposed on high wage earners. This tax is more commonly called the “Net Investment Income Tax” or (“NIIT”). There is a lot of confusion because the rules governing application of the NIIT contain nuances with regard to Americans working overseas and with regard to so-called nonresident alien individuals (NRA).

See my previous blog posting “NIIT-Picky Nuances For Americans Overseas Or With Offshore Investments” concerning how the NIIT impacts Americans overseas or those with offshore investments.

Broadly speaking, the NIIT is a 3.8% surtax on “net investment income” that applies to Read More

Written by | Posted in Expatriate • Income Tax

Do I Really Have To Pay More For My Investment Gains In 2013?

As with all good tax questions, the answer is: It Depends! The new 3.8% tax on your Net Investment Income (NII) only kicks in at the higher adjusted gross income (AGI) levels. So unless you are in the top 3% of earners then the answer is no.

But if your AGI is over the threshold then you will possibly have to pay an additional 3.8% on the NII. The thresholds are $200,000 if unmarried, $250,000 if married filing jointly, and $125,000 if married filing separately.

Once you have determined that your income is over the threshold, you must determine what types of income applies. The IRS, of course, has a handy new form, the Form 8960, for just that calculation. The long and short of it boils down to this. You will pay the additional tax on the lesser of the amount of your NII or the amount of your income over the threshold. Read More

Written by | Posted in Individual • North America