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Problem 1-27 Special Rules for High-Income Taxpayers (LO 1.9) Rachel is single and has wages of $150,000...

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Accounting

Problem 1-27
Special Rules for High-Income Taxpayers (LO 1.9)

Rachel is single and has wages of $150,000 and dividend incomeof $90,000. She has no investment expenses. Calculate the amount ofthe 3.8 percent net investment income tax she must pay.
$

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"The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code. The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts." (Source: www.irs.gov)
USD
Wages Income 150,000.00
Dividend Income (Net Investment Income) 90,000.00
Modified adjusted gross income 240,000.00
Threshold Income (for single taxpayers) 200,000.00
Excess than threshold (240,000-200,000) 40,000.00
Taxpayer's Net investment Income (dividend) 90,000.00
Net Investment Income Tax= 3.8% of Excess than threshold or Dividend income (whichever is less)
NIIT whichever is lesser 90,000*3.8%= 3,420.00
or  
40,000*3.8%= 1,520.00
Net investment income tax she must pay is $1,520

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Problem 1-27Special Rules for High-Income Taxpayers (LO 1.9)Rachel is single and has wages of $150,000 and dividend incomeof $90,000. She has no investment expenses. Calculate the amount ofthe 3.8 percent net investment income tax she must pay.$

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