2016 Tax Planning for Investment Income

What Will Be Considered Investment Income?

Investment IncomeInvestment Income

  • Interest, Dividends, Capital Gains (long and short) including the gain on the sale of investment real estate and second homes)
  • Annuities (but not annuities in IRAs or company plans)
  • Royalty Income
  • Passive Rental Income and Other Passive Activity Income
  • Above items from a child’s tax return that are reported on a parent’s return (the “Kiddie Tax”)

NOT Investment Income

  • Wages and Self-Employment Income
  • Active Trade or Business Income (including interest, dividends capital gains)
  • Distributions from IRAs, Roth IRAs, and Company Plans
  • Including Net Unrealized Appreciation
  • Excluded Gain from the Sale of a Principal Residence
  • Municipal Bond Interest
  • Proceeds of Life Insurance Policies
  • Social Security and Veterans’ Benefits
  • Gains on the Sale of an Active Interest in a Partnership or S Corporation
  • Taxable income from items that are NOT investment income can push taxpayers over the income threshold and cause investment income to be subject to the 3.8% surtax.

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