What is NIIT

Forum|Forum|1 year ago
April 2, 2025
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TurboTax is saying that I owe Net Investment Income Tax for 2024. What would cause this? I don't have a business or anything like that, just a W-2 job that pays salary plus RSUs. I did sell some of that stock and rebalance my portfolio, but the stock hadn't appreciated much. My company automatically withholds taxes when the stock vests.

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MayaD

The income from RSUs could be subject to the Net Investment Income Tax (NIIT).

NIIT is an additional 3.8% tax for capital gains on modified adjusted gross income above $250,000 for married filing jointly or $200,000 for individuals

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M-MTax

You probably just exceeded the (MAGI) threshold for filing Form 8960.

See https://www.irs.gov/instructions/i8960#en_US_2024_publink10003905

Net investment income.

Generally, net investment income includes gross income from interest, dividends, annuities, royalties, and rents, unless they’re derived from the ordinary course of a trade or business that isn’t (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities. In addition, net investment income includes other gross income derived from a trade or business that’s (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities. Additionally, net investment income includes net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property other than property held in a trade or business that’s not (a) a passive activity, or (b) a trade or business of trading in financial instruments or commodities.