Blog Archive
December 2014

Net Investment Income Pitfalls and Planning for Dentists and Medical Professionals

If you’re a dentist, doctor, or other entrepreneur who has looked closely at your tax return this year, you probably noticed a new form 8960 hitting you with a new “Net Investment Income” tax, or simply NII for short. This blog gives a quick overview of the tax, and provides a few ideas – and warnings – about how to plan for the tax appropriately.

What is the NII?

The NII tax is an entirely new tax, meaning that it’s in addition to all other taxes you already pay, such as payroll tax, self-employment tax, alternative minimum tax, capital gains tax and, of course, regular tax (the last two of course also having been increased in 2013 through the addition of higher tax brackets). The NII tax is a 3.8% tax on the lesser of net investment income and income over $250,0001, and that limit is not adjusted for inflation, so as the value of the dollar decreases each year, more and more people will get caught by the tax each year...