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Avoiding Investment Income Tax

Audio version available here:

Length: approx. 1 min.


Since the enactment of the Affordable Care Act health-care expansion, the net investment income tax rate has not changed from 3.8%. The additional 3.8% tax is imposed on capital gains, interest, dividends, rents and more for those who earn modified adjusted gross income (MAGI for short) of $200,000 for single filers, and $250,000 for married joint filers. Especially for those with huge capital gains, the 3.8% can snowball into a significant sum of money. How can you avoid or minimize the net investment income tax? One way is to invest in municipal bonds that are tax exempt. Another way is to spread out one’s capital gains over several years rather than cashing out everything all at once. Finally, you should plan ahead and strategize in buying and selling assets. If you would like to read more, check out the source article: https://www.cnbc.com/2023/07/05/how-to-avoid-the-net-investment-income-tax-for-2023.html#:~:text=Investors%20who%20may%20be%20subject,where%20you%20live%2C%20he%20said. Tax avoidance is a great and legal way to reduce your taxable income, something we specialize in at XQ CPA. If you would like to start the journey to reduce your tax liability, we encourage you to reach out at 832-295-3353. We would love to help you.


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