What is Mitch’s net investment income tax if he has wages of $188,000 and an additional income of $15,000?

To determine Mitch’s net investment income tax, we start by understanding what qualifies as net investment income and the thresholds for the additional tax.

Net investment income generally includes income from interest, dividends, capital gains, rental income, and other investment-related income. The net investment income tax (NIIT) applies to individuals with modified adjusted gross incomes above certain thresholds. For single filers, the threshold is $200,000. Since Mitch has wages of $188,000 and additional income of $15,000, his total income amounts to $203,000.

Given that Mitch's modified adjusted gross income (MAGI) exceeds the threshold of $200,000 by $3,000 ($203,000 - $200,000), he is subject to the net investment income tax. The NIIT is 3.8% of the lesser of net investment income or the amount by which MAGI exceeds the threshold.

If we assume that Mitch's entire additional income of $15,000 is considered net investment income, we need to calculate 3.8% of the amount that exceeds the threshold. Since his MAGI exceeds the threshold by $3,000, the net investment income tax will be based on this excess amount.

Thus, the