Net Investment Income Tax Individuals Estates Trusts, Form 8960 (2023)

Form 8960, officially titled "Net Investment Income Tax—Individuals, Estates, and Trusts," helps calculate and report the Net Investment Income Tax (NIIT) on your 2023 federal tax return. This tax applies to certain types of investment income for individuals, estates, and trusts exceeding specific thresholds.

What is the Net Investment Income Tax (NIIT)?

  • The NIIT is an additional 3.8% tax on a portion of net investment income for some individuals, estates, and trusts.

Who needs to file Form 8960?

You generally need to file if your modified adjusted gross income (MAGI) exceeds:

    • $200,000 for single filers and married individuals filing separately.
    • $250,000 for married couples filing jointly.
    • $125,000 for heads of household.

What income is taxed?

The NIIT applies to various types of investment income, including:

  • Interest: Interest earned on savings accounts, bonds, and other investments.
  • Dividends: Distributions from stocks and mutual funds.
  • Capital gains: Profits from selling investments like stocks or real estate (only if held less than one year).
  • Royalties: Payments received for intellectual property rights.
  • Rents: Income generated from rental properties, unless derived from an active trade or business.

Key steps to file Form 8960:

Step 1: Compile details of all your investment income and deductions.

Step 2: Subtract allowable deductions from your investment income.

Step 3: Check if your MAGI and net investment income exceed the filing thresholds.

Step 4: Fill out Form 8960. Follow the instructions carefully, calculating the NIIT based on applicable rates and exemptions.

Step 5: Attach Form 8960. Include it with your main tax return (Form 1040, 1040-SR, or 1041).

For the current year's Form 8960, click here.