The net investment income tax is a 3.8% surtax on a portion of your modified adjusted gross income (MAGI) over certain thresholds. It hits high earners with significant investment income. It might take a bite out of your finances even if you manage to avoid paying significant income taxes on your investment income through the use of deductions, credits, and other tax perks. Net Investment Income Tax | Internal Revenue Service Form 8960 Instructions provide details on how to figure the amount of investment income subject to the tax. If an individual has too little withholding or fails to pay enough quarterly estimated taxes to also cover the Net Investment Income Tax, the individual may be subject to an estimated tax penalty. The Net Investment Income Tax is separate 8960 - Net Investment Income Tax (8960, K1, ScheduleC ... Net investment income may include rental and royalty income, income from partnerships, S corporations and trusts, and income from other passive activities reported on your Schedule E. Use Form 8960, Net Investment Income Tax, to figure this tax. The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have Questions and Answers on the Net Investment Income Tax ...
The commentator noted that, although Charitable Purpose Trusts are statutorily exempt from the net investment income tax, Charitable Purpose Estates are subject to section 1411 but may achieve the same result through the use of the charitable deduction in section 642(c).
What is the Net Investment Income Tax? Having taken effect for tax year 2013, the Net Investment Income Tax is a surtax — that is, a tax responsibility in addition to the federal income tax — calculated at a rate of 3.8 percent on a base of income that is the lesser of one’s: • Modified adjusted gross income over the threshold amount, or • Net investment income IRS issues final instructions for net investment income ... Form 8960 is a dual-purpose form that is used by both individuals and trusts and estates to compute the new 3.8% net investment income tax and then to report the tax on Forms 1040, U.S. Individual Income Tax Return, and 1041, U.S. Income Tax Return for Estates and Trusts. Net Investment Income Tax Individuals report this tax on Form 1040, U.S. Individual Income Tax Return; Estates and trusts report this tax on Form 1041, U.S. Income Tax Return for Estates and Trusts. For additional information, refer to the Instructions 8960 and to the Net Investment Income Tax FAQs on our website.
In January 2014, the IRS released draft instructions for Form 8960, Net Investment Income Tax – Individuals, Estates, and Trusts, as well as the final version of Form 8960.
Net investment income is reduced by certain expenses allocable to that income. Modified AGI is your AGI increased by the amount of excluded foreign income. If your modified AGI is more than the threshold amount and you have net investment income, you’ll be subject to the 3.8% tax. The tax will be on the lesser of these: Your net investment income 2016 Form 8960 - E-file Your Income Tax Return Now Free ... Form 8960 Department of the Treasury Internal Revenue Service (99) Net Investment Income Tax— Individuals, Estates, and Trusts Attach to your tax return.
Individuals report this tax on Form 1040, U.S. Individual Income Tax Return; Estates and trusts report this tax on Form 1041, U.S. Income Tax Return for Estates and Trusts. For additional information, refer to the Instructions 8960 and to the Net Investment Income Tax FAQs on our website.
Dec 04, 2013 · Your AGI can be found on the bottom of page 1 of your Form 1040. errors. First off, the 3.8% tax is never assessed on a gross for purposes of the net investment income tax to $50,000, and IRS Releases 2013 Final Form 8960, Net Investment Income ...
Net Investment Income Tax | Internal Revenue Service
How to avoid new 3.8% tax on investment income - MarketWatch Oct 15, 2013 · The new 3.8% Medicare tax on net investment income took effect on January 1. It only affects higher-income individuals, but that can include anyone who has a … IRS Releases Long-Awaited Draft Instructions To Form 8960 ... Jan 07, 2014 · IRS Releases Long-Awaited Draft Instructions To Form 8960: Computing New 3.8% Tax On Net Investment Income Tony Nitti Senior Contributor Opinions expressed by … United States: Net investment income tax may result in ...