What is net investment income and what is the importance of the same to tax paye

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Net investment income is the income obtained as a result of investments and not active work. It consists of interest, commodities, stock gains, rental profits, and royalties. The significance of this category is that it defines whether a person should pay the 3.8% Net Investment Income Tax (NIIT) or not. This kind of income must be used to determine NIIT among the highest-income taxpayers. Knowledge of net investment income is useful in the planning of taxes, particularly in case of selling assets or through the generation of rental income. Through investment planning, the citizens will be able to lower their NIIT liability and avoid being caught in a taxation trap. Monitoring of these earnings is a way of correctly reporting and complying. What Is The Net Investment Income Tax

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