Just starting to dabble with 2023 taxes and just learned about the NIIT. Married filing jointly with an income of 250k+. Does this mean every cent of interest i earned on CD's last year will be subject to the 3.8% NIIT on top of the Federal + state taxes?
Answers
It never ceases to amaze me how people on the left keep voting for Democrats and then are shocked when their cities are overrun with crime, filth and illegal aliens, their taxes go through the roof, and their standard of living goes down the toilet.
And then who do they vote for the next time? MORE DEMOCRATS!
There aught to be a stupid tax so at least the people who are responsible are the ones who pay the lions share of the cost.
America def has its fair share of problems but putting the blame entirely on democrats and illegals is when you lose credibility.
Right, because the fentanyl and meth infused backwater towns in total Republican states like WV, Arkansas, Kentucky etc. are real beacons of civilization. Or is sexual abuse, drugs and domestic violence not considered "crimes" ?
Where is that fentanyl, sex and human trafficking coming from again?
OH! ... That's right! ... The Democrat's OPEN BORDER!
Have to admit I do get a belly laugh hearing Democrats complain about taxes though.
"This is one of the knock-off effects of higher interest rates."
I think it's more an effect of the B. Hussein Obama administration that championed the tax. Democrats never saw a tax they didn't love... Until they have to pay it that is.
If there's a Democrat in the White House next year your taxes are going to go up in 2026 anyway because the tax cuts every taxpayer has been enjoying that President Trump put in place will expire in 2025. Given the Democrats propensity to summarily reverse everything President Trump accomplished to the detriment of America I'd say the chances that they will renew your tax cuts are about the same as the chances that the Pope will convert to Islam.
33% bracket dropped to 32%, the 28% bracket to 24%, the 25% bracket to 22%, and the 15% bracket to 12%
The Democrats fought the reductions tooth and nail falsely droning their usual lie that it was only giving tax cuts to the rich.
"The (Republican controlled) Senate passed the bill on Dec. 2, 2017, by a party-line vote of 51 to 49. The House successfully passed the bill later that month by a vote of 224 to 201. No House Democrats supported the bill."
The Net Investment Income Tax that this post is about was Obama's contribution.
https://thefinancebuff.com/medicare-irmaa-income-brackets.html
I urgently need to get through to next stage of identifying possible solutions.
Every Tax Advisor/Preparer/Accountant I dealt with was a waste.
All of them want to "help" me menially do manual data entry I could do myself.
None of the can or willing to see the amount of Taxes I would pay as a problem.
None of them attempted to offer or even suggested any solution or approach toward.
I actually recently posted my concern about MAGI and IRMAA.
I heard nothing but silence, as if I am conspiring to break the law.
Having said that, IRMAA itself is a relatively small problem for high income earners on the scale of tax problems. The most you would have to pay for IRMAA if you earn over $500k as a single person is a little over $5k a year. Yes it's an outrage, but not worth the full focus of your time when there are other taxes you are paying that are far more significant.
I've seen some wealthy people get all upset about IRMAA because they don't understand the scope of it while meanwhile ignoring tens or hundreds of thousands of dollars in other taxes they are paying that are completely corrupt.
The entire US tax system is hopelessly corrupt and any moral government would scrap it and start over. When the average citizen has to hire someone just to figure out how much they owe, it's all the proof you need that the system is oppressive and unconstitutional.
Not sure if it goes off your modified adjusted gross or your adjusted gross which would make a big difference.... all that being said I have an accountant.....;)
So, how to deal with it, other then to have an accountant.
Divorce, Separate?
Become adoptee Widow? Declare yourself NRA, or Alaska Native?
There must be some creative solution short of Evasion.
[Should have been $300k, not $100k]
Creative solution: As your CDs mature, convert them to in-state Munis, or Muni Bond funds. Doing so, to Munis with similar tax-equivalent yields as your CDs, it is possible to lower the interest that your MAGI counts by a third.
Of course the exact benefits depend upon your tax brackets — both federal and state. And upon the Munis you are able to round up. But, as a rough example, in round figures (to make this concrete, so you get the general idea): $300k in a 5% CD yields $15k in a year; in a 3.3% Muni you'd receive only $10k per year. A decrease of $5k (one third) in interest seen by your MAGI for tis invested sum of $300k. (And you get to keep the same $10k, tax-free.)
Lots of assumptions here; your mileage will certainly vary, but you can extrapolate on the basic principle.
And to reduce your income even more, don't wait for your CDs to mature. Break them early, and you can use the EWP to reduce your AGI/MAGI.
Bond may protect you, depending how it held, against additional Tax as NIIT, but provide no escape comes IRMAA.
What I don't like is when the term as precise as "equivalent" is used in conjunctions with "assumptions".
when such "basic principle" is extrapolated it can eventually bring the mileage to the level of no Additional Tax or Taxes at all.
EWP could be a double whammy, not only it reduces the Income, depending on State's Tax Code some may end up paying more State Tax than Federal.
I am way-way off my comfort level for speaking on the subject
If you die early in the year your MAGI in your final year will likely be lowered significantly.
"Taxpayers should be aware that these threshold amounts are not indexed for inflation."
This quote can be found in the answer to Question 3 on this link
https://www.irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax
i certainly think that you shouldn't be doing explanations.
i think you should be complaining...about receiving 0.5 answer in total, before your post was typically hijacked into political meandering and grunts about taxes and healthcare interwind with personal stories
You can move to any part of British Empire, income Tax will follow.
You'd have to leave behind the US Passport along with worries about FDIC and NCUA, Interest and Tax Rates and all other staff that makes great again.
"every taxpayer has been enjoying that President Trump put in place"."100% of the working class" Americans owe 100% of their lives to US Presidents, to all 45 of them.
More Taxes - President (NAME)
Less Taxes - President (NAME)
War against United Kingdom - President (NAME)
War along United Kingdom - President (NAME)
anyway, before the subject is totally highjacked
"Good Accountants are hard to find" - I strongly disagree. Even less problem finding "good" CPA for Tax Preparation. They all been replaced with very "good" Accounting software.
What is hard to find indeed is "good" Economists and Advisors.
IRS and CPA guidelines make it very difficult for licensed professional to walk fine line between Advice and Aversion, thus encouraging bias on the side of paying more rather then less.
"my CPA is money well spent for me." - because she feeds you with information or because she volunteers solution?
Every CPA I came across treated me as if I am suicidal every time I ask if there is alternative interpretation of Tax Code
And when there is a situation too complex for Intuit, I had to ditch Accountant and deal directly with IRS.
There... when it comes now to MAGI, NIIT and IRMAA I need some ideas, some sense of direction.
From there I could manage professionals to design the solution, the solution which I could execute myself.
Since I am not "100% of the working class", I cannot count on President (NAME) to deliver it for me.
Where the subject feels to be too personal, PMs may come to rescue.
Of course they do. Because you probably come across to them as one of those "Sovereign Citizen" guys -
(gee I miss Better Call Saul!) - https://www.youtube.com/watch?v=JBbIEFpgAIk
you red me well, I am pushing the envelope.
I am here to up my IQ, because of intolerance of ignorance and despisement of mediocracy.
I could post on YT my interactions with "Advisors", it is more hilarious than Better Call Saul.
The recent one(I won't disclose the Institution) could go for Grammy.
As Private/Premier Client I was called names for steering the meeting away from Sales into Synoptic of "Equivalent".
It sounds as if you've had bad experiences with financial advisors. At an earlier period in my life I did as well. As a result I fired the SOB. That outcome worked out well for me and mine, but I absolutely can't claim that it would have worked out well for everyone. (It probably worked out fairly well for my former advisor, though - he never seemed overly displeased about having lost me as a client! So at least we agreed on that.)
These days I'm my own financial advisor. This is partly because I actually don't mind spending some time looking at investments nor boning up on tax changes, etc., strange as it may seem. Not everyone does. Also, not everyone has the same level of risk tolerance or diversification needs, and I feel I best know our own.
In my opinion only - if you've had bad experiences with 1 or 2 advisors and you still are looking for help - then you might want to try others. But if you've tried out a number of them and still not been satisfied - then you may want to forge your own path forward.
Good luck! (Because, a surprisingly large part of it is luck, after all!)
I never said I had "bad experiences", but if someone insisted on discussing semantics...
then semantically "bad experiences" is no such thing when experience regarded as learning.
and if learning is a "bad experience", then I am stranger here.
It were the financial "advisors" had "bad experiences" because I learn hard how not to put myself in a position to allow "advisors' to cause to me "bad experiences".
It isn't luck, it's hard and tedious labor.
It isn't them who SOB, It is someone who is dumb enough to be taken advantage of.
The real problem is that you shouldn't need an accountant to figure out how much tax you owe in the first place. It's a corrupt system.
Also, an accountant has dozens or more clients. There is no way they have the time to focus enough on each client to maximize their financial benefit. This is especially true of higher net worth clients who have more complicated financial profiles.
I love my CPA, he's a great guy and very knowledgeable. But I am fully aware that everything he does has to be carefully checked and often find things that could be done better. I don't expect him to give them the attention that I myself can.
PS, the same is true of lawyers and any professional. The less people know about the services they provide the more satisfied they tend to be. They cannot see the warts or know the opportunity costs they have incurred.
The main issue I have with accountants (and especially tax attorneys) is that much of their earnings as an industry comes from charging people fees to navigate a corrupt tax system. So in that respect I see their industry as part of the problem.
But there are certainly other services accountants perform that are completely legit and necessary for both individuals and businesses.
And if I was being totally honest I have kept the Accountant a little out of laziness. I sold my business last year and probably have plenty of time to do my own taxes now but just hate our tax system and don't want the aggravation. Who knows maybe I will discontinue her services and do my own taxes next year.
He remarked that he could only imagine the poor quality of care people who had no knowledge of medicine were getting.
It's not always or even usually intentional, it stems from the fact that doctors have many patients to attend to and there is no way they can give each of them the proper amount of time or attention to give them quality care.
It's the dirty little secret in every profession.
They can get away with it because their clients are unable to assess the quality of the work.
My father was wealthy and got no better health care at the supposedly top facilities than anyone else got elsewhere. It isn't how much you pay for it, who pays for it or where you go to get it that gives you the best chance of getting good healthcare. It's WHAT YOU KNOW about healthcare. And fortunately for my father who lived to 98 he knew quite a bit and was able to separate the good doctors from the bad.
My father was very well respected by his patients because he spent a lot of time and effort on them and cared about their results. And he was extremely knowledgeable in his field often consulted by other doctors seeking advice. He retired 34 years ago and to this day, maybe once every couple of years I run into a former patient who tells me what a great doctor he was.
He made much less money in his profession than he could have because he wanted to focus on giving as much attention to each patient as possible. Money isn't the answer. Government healthcare isn't the answer (like we need more VA!)
He made most of his money as a successful investor.
"The best barometer of rising inequality in America is no longer income. It is life itself. Wealth inequality in America is growing, but The Post found that the death gap — the difference in life expectancy between affluent and impoverished communities — has been widening many times faster. In the early 1980s, people in the poorest communities were 9 percent more likely to die each year, but the gap grew to 49 percent in the past decade and widened to 61 percent when covid struck."
https://www.washingtonpost.com/health/interactive/2023/american-life-expectancy-dropping/
It was the same way with education when I was in school. The teachers that were fired were sent to the schools in the poorest part of town. When I was on the township board it was the waste companies, the dumps, etc that tried to get into the poorest place in our township.
Somebody would have to explain to me Medical Justification and Economic Affordability of such bizarre custom.
I have a sense that such friends do not contribute each $600+ a month to Medicare.
I would rather suspect that such friends of Medicare tap Medicaid as well.
if only 2% of Medicare friends make "3 day physical" an annual tradition it would cost the Nation between 2 to 4 Millions Clinical Days.
There will be no GDP $$$ left available for anything else and no Clinical beds available for anyone else, or even for the friends themselves if they become unwell in between the physicals.
It is a shame that Cleveland Clinic resources are wasted in such way.
The sad part of it is that no intensity or frequency of physical is statistically correlated with wellness.
His sister my friend since first grade and also a widow is in a nursing home with dementia. All of us who did physical labor and did not have a desk job like me are disabled one way or another. But not one of them are complaining. I only help split wood and stacked wood every weekend and worked 2 jobs for 23 years. My husband was disabled for 18 years.
I am sorry to disagree with you about a physical not being statistically correlated with wellness. My husband as business manager suggested to have it in the insurance in the 1980's. The guys voted on it and it passed. The are self insured and pay for their own healthcare and insurance etc. They have no paid holidays or paid vacation but that is what they voted on. If you know how many illnesses were caught early in the families of these workers you would not say this. Even at a routine physical that my cousin who is also in the building trades and went to my son for his routine physical had open heart surgery that same night. When I was in ER for 8 yours with my heart the Thursday before Christmas the doctor there and the cardiologist I had to see last week when they heard my name asked if he was my son was the doctor and said his first name and they told me how many patients he has saved during his routine physicals. He is an internist. He is in a group of specialists and I am happy that our insurance will pay for a routine physical every year. I pay $6500 a year for this insurance it but when I had to have an experimental procedure done on my heart it completely paid for it. Another friend had a stent put in her heart before Christmas and it was completely paid for. Her son who sells medical appliances to surgeons and trains them on how to use them had to come to Michigan to observe the surgery that the doctor was doing for the first time after Mike trained him. My friend could not be transferred to the U of M hospital to have it done.I brought the desk top near the TV. GO LIONS!!!! THE Chiefs won. GOOD DAY!!!