With the arrival of 2022, many individuals will be subject to the 3.8% net investment income tax (NIIT). This tax is applied to those with income above certain thresholds, and the amount of income subject to the NIIT can vary from person to person. It is important to be aware of this tax and take the necessary steps to avoid it.
The best way to avoid the NIIT is to make sound financial decisions when it comes to investment. It is important to anticipate which investment may be subject to the NIIT and to decide whether or not it is worth the risk. For example, if an investor has a high-yield stock that is likely to be taxed at a higher rate, then it may be wise to sell the stock and reinvest the proceeds into a lower-yield stock that may not be subject to the NIIT.
Another way to avoid the NIIT is to invest in tax-advantaged funds. These funds are designed to minimize or eliminate the amount of taxes that an investor must pay. For example, the John Hancock tax-Advantaged Global Shareholder Yield Fund has a net investment income per share of $0.048 as of November 30, 2022. invest in these funds can help an investor save money by reducing the amount of taxes they must pay.