I have a fairly high income at ~$200k annually. I sold a high dollar collectible for ~$150k.
My withholding is setup correctly for my income, making my tax due ~$0.
When I include the collectible and check the “collectible” box, it makes my tax due ~$54k at ~35% tax, which is similar to my regular income. I thought collectibles were taxed at the max 28% rate. Any idea why it would be taxed at a level similar to my regular income? Collectable was held for around 3 years.
Yes. On line 47 of the Schedule D worksheet there is a total of $84k for tax on taxable income. My withholding is $37k, so I would expect a tax due of $47k, but TurboTax is calculating it as $54k due. The only things entered are the W-2 and the collectible gain.
I found the delta.
It is Net Investment Income Tax (NIIT) at 3.8%. Never knew that existed. Ugh.
The net investment income tax (NIIT) is a 3.8-percent tax on the smaller of your net investment income or modified adjusted gross income. The tax only applies if you report net investment income; your wages and self-employment earnings, by themselves, have no impact on the NIIT.
The net investment income tax (NIIT) is a 3.8-percent tax on the smaller of your net investment income or modified adjusted gross income. The tax only applies if you report net investment income; your wages and self-employment earnings, by themselves, have no impact on the NIIT.