Tax laws can be so complex, and it’s super helpful to break them down like this. Understanding how different policies can impact our finances is crucial for making informed decisions.
Making profitable investments during this time of political change can be risky without that insight. For me, working with an adviser is the best first step to navigate these complexities and make informed choices.
I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.
I wasn’t aware of NIIT before and your explanation was helpful. Shouldn’t the IRS just create 4 LTCG tax brackets? 0%, 15%, 18.8%, and 23.8% is really how the math plays out.
That was actually very well (and quickly) explained. Thank you! As taxes go, this is very reasonable and a good solution for funding the ACA. Yes, it might catch the occasional retiree or worker that are on the wealthy side, but this is really easy to avoid at those levels. For your examples, instead of selling 400k of stock in one year (why do that anyway?) just sell half of that or so to keep under the limit. Real estate? Well, either suck it up or do a 1031. An even more advanced route is to borrow against the asset while selling part of it, then sell the remaining part next year (or several years). But if you're moving $10M, $100M, $1B... you aren't going to break it up like this. This will catch the very wealthy far more, which is what it is intended to do.
Thank you. Very easy to follow and quite helpful. Anyone who complains about an additional 3% tax can go cry a river. At least they are not being charged 37% (regular income)
5:41 So the $100k capital gain is progressive where 70k is taxesd at 15% and the $30k is 18.8%? I was under the impression all $100k of the cap gain would be 18.8%.
Great question...the thresholds have NEVER been increased since this tax was created. There's some political history to this. During the 2008 presidential campaign, $250k became the line in the sand for "high income" households during the final months as the candidates debated. I believe this is mainly why $250k ($200k for single filers) was the chosen number when the net investment income tax was created.
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?
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)
Tax laws can be so complex, and it’s super helpful to break them down like this. Understanding how different policies can impact our finances is crucial for making informed decisions.
Making profitable investments during this time of political change can be risky without that insight. For me, working with an adviser is the best first step to navigate these complexities and make informed choices.
I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.
Hmmm this is quite interesting, Please can you leave the info of your investment advisor here? I’m in dire need for one.
Nicole Anastasia Plumlee can't divulge much. Most likely, the internet should have her basic info, you can research if you like.
I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get.
Very simple, very easy.
well done! thank you
I finally understand who is required to pay the 3.8%. Thank you so very much.
I wasn’t aware of NIIT before and your explanation was helpful. Shouldn’t the IRS just create 4 LTCG tax brackets? 0%, 15%, 18.8%, and 23.8% is really how the math plays out.
I was not aware of NIIT. While my income has yet to reach $200,000, this is still important information.
Excellent review
Another great explanation!! Thank you so much.
Great Video!
Thanks! Glad it was helpful.
Very well explained. Thank you for posting this video.
Glad it was helpful!
I just learned about the NIIT while filing my taxes. goddamit, curse the IRS!
Blame Obamacare.
Wouldn’t it be curse congress?
That was actually very well (and quickly) explained. Thank you!
As taxes go, this is very reasonable and a good solution for funding the ACA. Yes, it might catch the occasional retiree or worker that are on the wealthy side, but this is really easy to avoid at those levels. For your examples, instead of selling 400k of stock in one year (why do that anyway?) just sell half of that or so to keep under the limit. Real estate? Well, either suck it up or do a 1031. An even more advanced route is to borrow against the asset while selling part of it, then sell the remaining part next year (or several years). But if you're moving $10M, $100M, $1B... you aren't going to break it up like this. This will catch the very wealthy far more, which is what it is intended to do.
Great teaching video. I watch a lot of these, you are at the top of your class!
You always do a fantastic job!!! Thank you! :)
Thank you! Cheers!
Thank you. Very easy to follow and quite helpful.
Anyone who complains about an additional 3% tax can go cry a river. At least they are not being charged 37% (regular income)
Someone could certainly be in the 37% bracket with interest income and also get hit with the 3.8%.
Thank you! I get it now!!
excellent video.
I agree about the long term cap gain tax table and needing to add in that extra level at $250k for married joint filers.
What about deductions for improvements made to investment property prior to selling it, is there a list of approved improvements i can look into?
Great Video! I had not idea NIIT existed, I hate it. Is it only for Long-term Cap Gains or does it also apply to Short-term cap gains?
Thanks for the video. For your examples, you're not considering the standard deduction in the MAGI?
5:41 So the $100k capital gain is progressive where 70k is taxesd at 15% and the $30k is 18.8%? I was under the impression all $100k of the cap gain would be 18.8%.
will they increase the NIIT threshold anytime soon. 200k seems low for an individual nowadays.
Great question...the thresholds have NEVER been increased since this tax was created. There's some political history to this. During the 2008 presidential campaign, $250k became the line in the sand for "high income" households during the final months as the candidates debated. I believe this is mainly why $250k ($200k for single filers) was the chosen number when the net investment income tax was created.
3:37 Wouldn't they be able to split the stock sale over 2 tax year? 12/31, 1/2
Yes, that definitely could be a planning approach.
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.?
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?
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)
does NIIT apply to crypto/bitcoin gains?
yes those are lumped into capital gains along with the rest, so are subject to NIIT if you hit the threshold
😮
and Additional Medicare tax....0.9%. That one hurts because its based on total income over 250K.
That’s awesome… why don’t they just take all our money!!! Tax those responsible, hard working people!!! They make too much!!!
Aww shucks, I don’t make enough moorland to pay this 😂😂😂😂
This is another bad tax to hurt the middle class especially after they start RMDs.
Middle class is bringing home more than $250K each year?
Repeal ACA and NIIT!!