When you make money from investments, the government doesn’t always let you keep it all. The Net Investment Income Tax, a 3.8% surtax on investment income for high earners. Also known as NIIT, it kicks in when your modified adjusted gross income crosses $200,000 (single) or $250,000 (married). This isn’t about fancy trusts or offshore accounts—it’s about real income from dividends, capital gains, and rental profits that many working professionals never see coming. If you’re earning from stocks, ETFs, or crypto, and your income is climbing, this tax is already affecting you—even if you didn’t get a notice.
Investment tax planning isn’t about avoiding taxes. It’s about tax-loss harvesting, the practice of selling losing investments to offset gains and reduce your taxable income. It’s also about timing: shifting income into Roth conversions, a strategy where you pay taxes now on IRA funds to avoid them later, or using municipal bonds that generate tax-free interest. These aren’t secrets—just tools that most people ignore until it’s too late. And they’re not just for the wealthy. Someone making $220,000 a year from freelance work and stock sales can save thousands just by adjusting when they sell.
The MAGI threshold, the income level that triggers the 3.8% surtax doesn’t just include your salary. It includes capital gains, dividends, and even rental income. That means two things: you can’t just hide behind your W-2, and you can’t ignore your investment activity. If you’re buying and selling assets, you’re already in the game. The question isn’t whether you need to plan—you already are. The question is whether you’re planning smart.
What follows isn’t theory. These posts show how real people use tax-loss harvesting to cut their bills, how Roth conversions help avoid higher brackets later, and how simple shifts in portfolio timing can lower your tax bill without touching your strategy. You’ll see what actually works—no jargon, no fluff, just the moves that matter when your money’s on the line.
Choosing between tax software and a CPA for investment taxes? Software saves money upfront, but a CPA can uncover thousands in deductions you didn’t know existed. Here’s who needs which.
