What triggers IRS Form 8960?
What triggers IRS Form 8960?
When to file Form 8960 If your net investment income is $1 or more, Form 8960 helps you calculate the NIIT you owe by multiplying the amount by which your MAGI exceeds the applicable threshold or your net investment income—whichever is the smaller figure—by 3.8 percent.
Is sale of business property subject to net investment tax?
Regardless of the level of participation of the shareholder in the C corporation’s business, the gain on the sale of C corporation stock is net investment income. Unless the corporation can elect S status prior to the shareholder’s sale of stock, the gain on the sale of stock is subject to net investment income tax.
Why do I have to fill out Form 8960?
Form 8960 Instructions Essentially, IRS Form 8960 is used to help you figure out if the Net Income Investment Tax applies to you. These can include investment interest expenses or state, local or foreign income taxes attributable to net investment income.
Who should use Form 8960?
Attach Form 8960 to your return if your modified adjusted gross income (MAGI) is greater than the applicable threshold amount. Use Form 8960 to figure the amount of your Net Investment Income Tax (NIIT). Controlled foreign corporation (CFC).
What is the 3.8 tax?
What is the Net Investment Income Tax (NIIT)? The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code. The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts.
What is Medicare surtax?
The Medicare surtax, also known as the “Additional Medicare Tax,” applies at a rate of 0.9% of all eligible Medicare wages above the threshold for your filing status. If your wages exceed the threshold, simply add taxes of an additional 0.9% of your Medicare wages.
Is Schedule C subject to NIIT?
B and C’s modified adjusted gross income is $300,000 and exceeds the threshold amount of $250,000 by $50,000. B and C are subject to NIIT on the lesser of $225,000 (B’s Net Investment Income) or $50,000 (the amount B and C’s modified adjusted gross income exceeds the $250,000 married filing jointly threshold).
Are annuities subject to NIIT?
In general, net investment income includes, but is not limited to: interest, dividends, capital gains, rental and royalty income, and non-qualified annuities. To the extent the gain is excluded from gross income for regular income tax purposes, it is not subject to the Net Investment Income Tax.
