Fillable Form 8960

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What is Form 8960?

Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, is a document used by taxpayers in the United States to calculate their Net Investment Income Tax (NIIT).

The NII Tax is a surtax on the net investment income of individuals, estates, and trusts that have income above certain thresholds. It's an additional tax on top of other federal income taxes and is designed to help fund Medicare and the ACA.

How do I fill out Form 8960?

A fillable copy of Form 8960 can be found here. As the majority of Form 8960 consists of providing precise numbers for calculation purposes, make sure to have all relevant forms and documents from the tax years beginning at the year you are filing your tax returns for ready to ensure that all calculations are made correctly and to avoid any possible issues with the assessment and payment of your NIIT.

Name(s) Shown on Your Tax Return

Enter all the names that are indicated on your tax return.

Social Security Number or EIN

Enter your social security number or EIN.

Part I - Investment Income

Mark the box that applies from the following:

• Section 6013(g) election
• Section 6013(h) election
• Regulations section 1.1411(g) election

Enter the relevant amount for each of the below in the spaces provided.

1. Taxable interest
2. Ordinary dividends
3. Annuities
4. Properties, Royalties, Partnerships, and Trusts
   1. Rental real Estate, royalties, partnerships, S torporations, Trusts, etc.
   2. Adjustment for net income or loss derived in the ordinary course of a non-section 1411 trade or business
   3. Sum of 4a and 4b
5. Disposition of Property
   1. Net gain or loss from disposition of property
   2. Net gain or loss from disposition of property not subject to net investment income tax
   3. Adjustment from disposition of partnership interest or S corporation stock
   4. Sum of 5a, 5b, and 5c
6. Adjustments to investment income for certain CFCs and PFICs
7. Other modifications to investment income
8. Total investment income. Enter the sum of 1, 2, 3, 4c, 5d, 6, and 7.

Part II - Investment Expenses

Enter the relevant amount for each of the below in the spaces provided.

9. Investments
   1. Investment interest expenses
   2. State, local, and foreign income tax
   3. Miscellaneous investment expenses
   4. Sum of 9a, 9b, and 9c.
10. Additional modifications
11. Total deductions and modifications. Enter the sum of 9d and 10.

Part III - Tax Computation

Enter the relevant amount for each of the below in the spaces provided.

12. Net investment income. Subtract Part II, Line 11 from Part I, Line 8. If the difference is zero or less, enter 0.

Individuals must proceed to Lines 13-17. Estates and trusts, proceed to Lines 18a-21.

Individuals

13. Modified adjusted gross income
14. Threshold based on filing status
15. Subtract Line 14 from Line 13. If the difference is zero or less, enter 0.
16. Enter the smaller amount between Line 12 and Line 15.
17. Net investment income tax for individuals. Multiply Line 16 by 3.8% (0.038), then enter the product here and on your tax return.

Estates and Trusts

18. Net investment income
    1. Amount of Net Investment Income
    2. Deductions for distributions of net investment income and deductions under section 642(c)
    3. Undistributed net investment income. Subtract Line 18b from Line 18a. If the difference is zero or less, enter 0.
19. Gross Income
    1. Adjusted Gross Income
    2. Highest tax bracket for estates and trusts for the year
    3. Subtract line 19b from Line 19a. If the difference is zero or less, enter 0.
20. Enter the smaller amount between Line 18c and Line 19c.
21. Net investment income tax for estates and trusts. Multiply Line 20 by 3.8% (0.038). Enter the product here and on your tax return.

Frequently Asked Questions (FAQs)

What types of income are excluded from the calculation of net investment income?

Tax-exempt interest, distributions from retirement accounts, and income from active businesses are excluded from the calculation of net investment income.

What are some deductions that can reduce net investment income subject to the tax?

Deductions such as investment interest expense, investment advisory fees, and expenses directly related to producing investment income can reduce net investment income subject to the tax.

Are there limitations on deductions for net investment income tax purposes?

Yes, deductions are subject to certain limitations based on the taxpayer's modified adjusted gross income (MAGI).

How is net investment income calculated on Form 8960?

Net investment income is calculated by summing up all types of investment income and subtracting allowable deductions.

What are the threshold amounts for the net investment income tax?

For individuals, the threshold is $200,000 for single filers and $250,000 for married couples filing jointly. For estates and trusts, the threshold is the beginning of the top income tax bracket.

Are there penalties for underpayment of net investment income tax?

Yes, there can be penalties or interest charges for underpayment of net investment income tax, ranging from legal action to additional fines.

Can individuals, estates, and trusts file Form 8960 electronically?

Yes, individuals, estates, and trusts can file Form 8960 electronically.

Are there specific deadlines for filing Form 8960?

Form 8960 is typically due with the taxpayer's annual income tax return, which is usually April 15th unless extended.

Can Form 8960 be amended if errors are discovered?

Yes, Form 8960 can be amended if errors are discovered. If such a situation occurs, make sure to contact the IRS as soon as possible in order to correct the error.

Can taxes reported on Form 8960 be refunded?

Yes, any overpayment of net investment income tax reported on Form 8960 is eligible to be claimed for refund. However, the process for requesting a refund may vary depending on individual circumstances. In such situations, most people will hire a tax professional to manage the particulars of how the excess money paid will be refunded.