What is the total Net Investment Income Tax for an individual with an adjusted gross income of $190,000 and net investment income of $22,000?

What is the total Net Investment Income Tax for an individual with an adjusted gross income of $190,000 and net investment income of $22,000?

• A. $456
• B. $836
• C. $1,200
• D. $3,845

Answer: (A)

To determine the total Net Investment Income Tax (NIIT) for an individual, it is essential to understand the components that influence the calculation. The NIIT is a 3.8% tax applied to the lesser of an individual's net investment income or the amount of modified adjusted gross income (MAGI) exceeding a specified threshold. For an individual with an adjusted gross income (AGI) of $190,000, it is important to first identify the applicable threshold for single filers, which is $200,000. Since the AGI does not exceed this threshold, the NIIT will only apply to the net investment income. In this case, the individual has net investment income of $22,000, which is used directly in the NIIT calculation since it is less than the threshold amount of $200,000. The calculation of the NIIT involves applying the 3.8% tax rate to the individual’s net investment income of $22,000. Therefore: Net Investment Income Tax = Net Investment Income × Tax Rate NIIT = $22,000 × 0.038 = $836 This means that the total Net Investment Income Tax owed by the individual is $836, aligning with the answer choice provided in

To determine the total Net Investment Income Tax (NIIT) for an individual, it is essential to understand the components that influence the calculation. The NIIT is a 3.8% tax applied to the lesser of an individual's net investment income or the amount of modified adjusted gross income (MAGI) exceeding a specified threshold.

For an individual with an adjusted gross income (AGI) of $190,000, it is important to first identify the applicable threshold for single filers, which is $200,000. Since the AGI does not exceed this threshold, the NIIT will only apply to the net investment income.

In this case, the individual has net investment income of $22,000, which is used directly in the NIIT calculation since it is less than the threshold amount of $200,000. The calculation of the NIIT involves applying the 3.8% tax rate to the individual’s net investment income of $22,000.

Therefore:

Net Investment Income Tax = Net Investment Income × Tax Rate

NIIT = $22,000 × 0.038 = $836

This means that the total Net Investment Income Tax owed by the individual is $836, aligning with the answer choice provided in