Why net investment income tax threshold is only 250k for MFJ?

[gb1]

It is 200k for single. All other tax brackets are proportionate, but not the NIIT threshold. I was expecting this to be 400k for joint filers. I have wondered about this for some time. Looking for a logical reasoning here.

[Bsch4477]

You’re looking for logic in the tax code? 

[rjs]

Logic and tax law do not go together. Congress decided to make the limits what they are. Their reasons for provisions of the tax law are not always clear.

[VolvoGirl · Accepted solution]

There will probably be program updates to come especially in the investment area.  Here are some links.....

What is Form 8959

https://ttlc.intuit.com/community/health-care/help/what-is-form-8959/00/26326

What is Form 8960

https://ttlc.intuit.com/community/forms/help/what-is-form-8960/00/26274

IRS info on Net Investment Income Tax

https://www.irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax

IRS Info on the Additional Medicare tax on high earners (for wages)

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Questions-and-Answers-for-the-Additio... 

[rjs]

@gb1  Future software updates will not change the threshold amounts for the Net Investment Income tax because the thresholds are fixed by law. They do not need to be updated and will not be updated.

[Mike9241]

The tax laws are what they are. some provisions are unfair. Congress writes the tax laws not the IRS. You can always write your Senators and Reps 

[gb1]

If anyone reading this, it might help to file separately. Obviously you would have to split up the investment accounts. Anyways, problem is that the investment income gets added to regular income while determining NIIT, that's another flaw in this tax law. Poorly written tax code.

[VolvoGirl]

But MFS is only half of Joint, so $125,000.  Don't see how that would help.

[gb1]

Unique situation -- one has a higher income, other has lower income.

[rjs]

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@gb1 wrote:

Unique situation -- one has a higher income, other has lower income.

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There's nothing unique about that. It's quite common. But having different levels of income is usually a reason to file jointly. You have to try it both ways and see which works out better, but you have to look at your overall total tax, not just whether you pay NIIT. Filing separately usually results in higher tax. It could increase your tax in other ways by more than you save by avoiding NIIT. And remember that if you file separately you have to either both itemize deductions or both take the standard deduction. You're not allowed to itemize on one return and take the standard deduction on the other.

If you are in a community property state, the difference in incomes might get erased by the community property rules.