Form 8960 Net Investment Income Tax Individuals Estates and Trusts

Form 8960: Net Investment Income Tax is a new form beginning January 1, 2013 and will calculate the additional 3.8% tax for certain Individual and Fiduciary returns.

What you need to know about Form 8960:

• Form 8960 will automatically generate if the return is subject to the additional tax.
• If additional tax is calculated it will be reported on 1040, Line 62 with box b checked or Form 1041, Schedule G, line 4.
• Tax is calculated on 8960 - Part III

The AGI threshold based on filing status is:

• $125,000 Married Filing Separately
• $200,000 Single
• $200,000 Head of Household
• $250,000 Married Filing Jointly and Qualifying Surviving Spouse (formally known as Qualifying Widow(er)

Estates and trusts are subject to the Net Investment Income Tax if they have undistributed Net Investment Income and also have adjusted gross income over the threshold amount.  See the instructions for Form 1041, Schedule G, line 1a, and the instructions for Form 1041-QFT, line 13, for the dollar amount at which the highest tax bracket begins for the tax year.

Adjustments for the Net Investment Income Tax Form in the 1040 module can be made by using Screen 45, Other Taxes.

1. Go to Screen 45, Other Taxes
2. In the left hand column select Schedule J, Recapture, Other Taxes
3. In the Section box in the bottom left hand side of the screen, Click on Net Investment Income Tax (Form 8960)

Note: Lacerte will only generate an amount on the form 8960, line 9b if the Schedule A is generating and there is an amount on line 5 for Income taxes.  Input for Foreign taxes paid is in Screen 25, Itemized Deductions, in the section labeled Taxes.  Scroll down to the bottom of the section to utilize the input field for Foreign Income Taxes.

See the Questions and Answers on the Net Investment Income Tax for additional information.