IRS Releases Draft of Form 8960 Net Investment Income Tax, the 3.8% Medicare Tax for 2013Posted on August 13 2013 by admin
On August 7, 2013 the IRS released the first draft of the Form 8960 Net Investment Income Tax. Form 8960 will report the new 3.8% Medicare tax on net investment income and will be filed with the 2013 Form 1040 U.S. Individual Income Tax Return and 2013 Form 1041 U.S. Income Tax Return for Estates and Trusts.
Beginning this year, individuals, estates and trusts whose modified AGI (adjusted gross income) exceed the threshold amount will be subject to the new 3.8% Net Investment Income Tax (NIIT). The threshold amounts are:
Married Filing Joint – $250,000
Married Filing Separate – $125,000
Single/Head of Household – $200,000
Estates/Trusts – $11,650
Net investment income for purposes of the NIIT calculation includes dividends, interest, rent, royalties, commercial annuities, net capital gains on assets that produce net investment income and passive trade or business income as well as income from financial instrument trading. Net investment income is the income after deductions for expenses that are “properly allocable” to the income.
Investment income does not include wages, active business income, pension/IRA distributions, or tax-exempt income. See Henry & Horne blog “Big Changes Coming Under PPACA in 2013 – Part 2 Individuals” for additional information on the calculation.
The IRS is accepting comments on Form 8960 until September 27th. The instructions for Form 8960 will be released later this year.
Melinda Nelson, CPA
There is nothing more complex than the world of taxes. We know this and yet we chose careers where we face these issues everyday. We get questions day in and day out about new tax laws, forms and news items and how they affect everyday people and businesses. Well, here at Henry & Horne we have set out to do what we do best; help everyday people understand what is going on in the world of state, local, federal, estate and international taxation. We will provide these weekly posts and we encourage you to give us feedback on those posts as well as letting us know what else you would like to know more about. Welcome to "Tax Insights." We hope you find this blog informative and worthy of your time.
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