Use Form 8960 to figure the amount of Net Investment Income Tax (NIIT) when modified adjusted gross income (MAGI) is greater than the applicable threshold amount below.
U.S. citizens and residents
Individuals who have for the tax year (a) modified adjusted gross income (MAGI) that is over an applicable threshold amount, and (b) net investment income, must pay 3.8% of the smaller of (a) or (b) as their NIIT.
The applicable threshold amount is based on the taxpayer's filing status:
- Married Filing Jointly or Qualifying Surviving Spouse: $250,000
- Married Filing Separately: $125,000
- Single or Head of Household: $200,000
Passive Activities
Net investment income generally includes income and gain from passive activities. A passive activity for purposes of net investment income has the same meaning as under section 469. A passive activity includes any trade or business in which the taxpayer does not materially participate. A passive activity also includes any rental activity, regardless of whether the taxpayer materially participate.
Real Estate Professionals
If the taxpayer is a real estate professional for purposes of section 469(c)(7), their rental income or loss are treated as nonpassive if they materially participated in the rental real estate activity. Rental income is included in net investment income if the income is not derived in the ordinary course of a trade or business.
Qualifying as a real estate professional does not necessarily mean they are engaged in a trade or business with respect to the rental real estate activities. If their rental real estate activity is not a section 162 trade or business or they do not materially participate in the rental real estate activities, the rental income will be included in NIIT.
Completing Form 8960 in TaxSlayer Pro
To complete Form 8960 in TaxSlayer Pro, from the main menu of the tax return (Form 1040) select:
- Other Taxes
- Net Investment Income Tax (Form 8960)
Net Investment tax is automatically calculated by the program. Enter any adjustments to income and any additional expenses allocable to investment income in Parts I, II, and III.
Additional Information: