Patty and Rich, married filing jointly, have $385,000 in MAGI and $90,000 of net investment income(NII). they will pay a sutax of:
A. $0
B. $1,710
C. $3,420
D. $5,130
1710
5130
To calculate the additional surtax that Patty and Rich will pay, we need to determine their Modified Adjusted Gross Income (MAGI) and their Net Investment Income (NII).
In this case, Patty and Rich have a MAGI of $385,000 and NII of $90,000.
First, let's determine if they are subject to the Net Investment Income Tax (NIIT). The NIIT is a 3.8% tax on the lesser of NII or the amount by which the MAGI exceeds a specified threshold.
For married filing jointly, the threshold for the NIIT is $250,000.
Since Patty and Rich's MAGI is $385,000 which exceeds $250,000, we need to determine whether their NII or the excess of their MAGI over the threshold is the lesser amount.
Their NII of $90,000 is less than the MAGI excess of $385,000 - $250,000 = $135,000.
Therefore, they will be subject to the NIIT on their NII of $90,000.
To calculate the NIIT, multiply their NII by the tax rate of 3.8%:
$90,000 * 3.8% = $3,420.
Therefore, Patty and Rich will pay a surtax of $3,420.
The correct answer is C. $3,420.