Final answer:
The 3.8% surtax on net investment income affects interest, dividends, capital gains, rental and royalty income, particularly for high-income taxpayers with a modified adjusted gross income above specific thresholds. Other types of income like regular wages are not subject to the surtax unless they are deemed passive.
Step-by-step explanation:
The 3.8% surtax applies to a taxpayer's net investment income for those with a modified adjusted gross income exceeding $200,000 for single filers or $250,000 for those married filing jointly. This surtax affects various forms of investment income, which include interest, dividends, capital gains, rental and royalty income, and non-qualified annuities. Income derived from wages or business operations is not subject to this surtax unless the income constitutes a passive activity for the taxpayer.
The net investment income tax (NIIT) aims to ensure that high-income taxpayers contribute a fair share towards the funding of healthcare reform. Calculating the precise tax liability can be complex due to the various thresholds and determinants used to determine net investment income versus other types of income.