Can someone explain the NIIT - don't really understand what it is?

Does this mean I need to make quarterly estimated tax payments for the NIIT part too? Or is it just calculated once at tax time?

Yes, if you expect to owe a significant amount due to the NIIT, you should include it in your estimated tax payments throughout the year. The NIIT is reported on Form 8960 and added to your regular income tax on Form 1040. If you're primarily earning dividends and interest, these are usually predictable enough to calculate approximate quarterly payments. Just remember that failing to pay enough during the year could result in underpayment penalties.

Does it work with all tax situations or just for investment income? I have some rental properties too and wondering if it would help with figuring out NIIT on those.

Hmm sounds interesting but how accurate is it? I've had tax software mess up my NIIT calculations before and ended up having to fix it manually.

It definitely works with rental properties! The system analyzes rental income and tells you which portions might be subject to NIIT based on whether it's passive income or active business income. It was super helpful for figuring out the difference. The accuracy has been great in my experience. I cross-checked the results with what my CPA calculated and they matched perfectly. It's especially good at handling the more complex stuff like when you have multiple income sources that might affect your NIIT calculation.

Wait how does this actually work? Do they just call the IRS for you? Couldn't I just do that myself?

This sounds like BS honestly. I've tried everything to get through to the IRS and nothing works. How could some service magically get through when nobody else can?

They use an automated system that keeps dialing and navigating the IRS phone tree until it gets through to an agent. Then they call you and connect you directly to that agent. It's like having someone wait on hold for you. No, it's not BS at all. They use a specialized system to keep calling until they get through. The IRS phone system is set up to only allow a certain number of callers in the queue - which is why most people get the "call back later" message. Claimyr's system keeps trying until it gets into that queue, then connects you. I was skeptical too until I tried it.

Would investing in growth stocks that don't pay dividends help reduce the NIIT? Since they don't generate current income until you sell?

Yes, that's a good strategy. Growth stocks that don't pay dividends won't generate current investment income subject to NIIT. You'll only potentially face NIIT when you sell and realize capital gains. Investments that generate unrealized appreciation rather than current income can be an effective way to defer the NIIT. Just remember that the eventual sale will potentially trigger both capital gains tax and NIIT if your income is above the threshold in the year you sell.

Yes, distributions from retirement accounts like 401ks and traditional IRAs count toward your MAGI, which is used to determine if you're over the threshold. They're not considered investment income subject to NIIT themselves, but they can push your other investment income into NIIT territory by raising your MAGI.