NET INVESTMENT INCOME TAX explained with examples

Large capital gains often are hit with an additional 3.8% tax known as the net investment income tax. In this video we talk about what the net investment income tax (NIIT) is and how it is calculated with different income combinations.
👉 My professional focus is retirement planning for individuals age 55+. Please visit my website or reach out for a complimentary planning session. Thanks for watching! 😀
Ted Erhart, CFP®
Financial Planner
Anoka, Minnesota
www.norrislakeretirement.com
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Norris Lake Financial Planning is a SEC registered investment advisor able to conduct advisory business in states where it is registered, exempt or excluded from registration. All contents contained herein should not be construed as an offer or solicitation for investment advice or for the offer or sale of any security, insurance or other investment product. Data contained here is obtained from believed reliable sources, however, cannot be guaranteed. Investments contain a risk of loss. Please consult a qualified legal, tax or accounting professional before implementing any investment or strategy discussed.

[@GalateaPolifemo]

I finally understand who is required to pay the 3.8%. Thank you so very much.

[@ricorodriguez3579]

I just learned about the NIIT while filing my taxes. goddamit, curse the IRS!

[@mhub3576]

Very simple, very easy.

[@eikoGoldstein]

well done! thank you

[@gammaknife9933]

Very well explained. Thank you for posting this video.

[@TedErhartCFP]

Glad it was helpful!

[@LilytheContessa]

What about deductions for improvements made to investment property prior to selling it, is there a list of approved improvements i can look into?

[@jhovudu11]

Thanks for the video. For your examples, you're not considering the standard deduction in the MAGI?

[@virginiarichter217]

Thank you! I get it now!!

[@johnwedgeworth4908]

I agree about the long term cap gain tax table and needing to add in that extra level at $250k for married joint filers.

[@chrisdime]

Great Video!

[@TedErhartCFP]

Thanks! Glad it was helpful.

[@sstewart_2001]

Can’t figure out what goes in line 9b. The IRS instructions are unclear. Isn’t it just your state income tax x amount of interest/ cap gains.?

[@ReesRetuta]

does NIIT apply to crypto/bitcoin gains?

[@homersimps335]

If I do NUA with a cost basis of 30k and also sell 50k of stock to help pay the taxes of the 200k of my 401k I am converting to a roth plus I have 20k in dividends. Is my MAGI going to be 300k and thus I will also owe NIIT on 100k? Or does the NUA cost basis not count?

[@boynton120]

I’m not accountant, but I understand that $$amount withdrawn from a retirement account… Although subject to ordinary income tax because they were “qualified” untaxed earnings allowed to grow tax free to encourage retirement savings….These retirement savings together with the growth are taxed the same as other earnings, are not includable in the NIIT calculation. Why? Because the funds originated from a retirement account)

[@billc6762]

3:37 Wouldn't they be able to split the stock sale over 2 tax year? 12/31, 1/2

[@TedErhartCFP]

Yes, that definitely could be a planning approach.