Reply To: Net Investment Income Tax

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#1937
wanttoknow
Participant

For the next three years I will continue to have itemized deductions exceed the new increased standard deduction because of a deduction for estate tax on IRD.

Concerning using the 2019 payment of 2018 state income tax for my 2019 N.I.I.T. calculation: My 2019 state income tax will be much much less than 2018 because my taxable income will be much much less. So, even with the $10,000 limitation, being able to deduct the 2018 state tax may be helpful for the 2019 N.I.I.T.

In your earlier post you said “the entire $10,000 you deduct for regular tax purposes . . . can be deducted for NIIT purposes. In other words, you don’t have to allocate the deductible portion between investment income and other income.”

But don’t I have to do some kind of allocation? (I’m thinking about future years, as well as this year.)

For example, since it was $15,000 in 2018 state income tax that was paid in 2018, do I allocate that between Investment income and other income? (And then reduce the former to $10,000 if necessary)

Or can the allocation be based on the entire amount of 2018 state income tax (regardless of when paid)? (With the reduction to $10,000 if necessary). (In this case, I couldn’t use the 2018 state income tax paid in 2019 for the 2019 N.I.I.T.)

  • This reply was modified 2 years, 8 months ago by wanttoknow.
  • This reply was modified 2 years, 8 months ago by wanttoknow.