Question

Calculation Error on Additional Net Investment Income Tax of 3.8%

Forum|Forum|4 years ago
April 7, 2022
1 reply
0 views

About to file when i found my additional net investment income tax of 3.8% of the amount over $250k included social security and wages. Turbo tax is taking the AGI amount from 1040 line 11, and inputting it directly onto line 13 on form 8960, whereas according to the irs this amount should be less social security, wages, etc which are not part of investment income. Anyone paying the additional Net Investment Income Tax of 3.8% is likely overpaying if relying on Tubotax

M

MichiganCanaryAuthor

Have just gone back through Turbotax for the past 5 years, and this error (in my opinion) has been there at least back through 2017, costing people extra taxes.

AmyC

Employee

Let's make sure we are looking at the same thing. In About Form 8960, Net Investment Income Tax Individuals, Estates, and Trusts, are the form and directions for this year. Net Investment Income Tax charges an extra 3.8% depending on your income and filing status exceeding the thresholds. This is calculated by using line 13, your actual MAGI and subtracting line 14, the threshold limits. If zero or less, then you are not subject to the NII. If your MAGI exceeds the limits, then the form moves on to just investment income to tax the additional amount.

From the directions:

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

M

MichiganCanaryAuthor

Thanks for the info. In the IRS answers it specifically says wages and social security are not part of NIIT, but in the worksheet you included it does include them. In the Turbotax notes on line 13 on 8960 where it says what is included, it does not say wages or social security. The fact that this is supposed to be an additional tax for high INVESTMENT income individuals, combined with the IRS answers about it, makes me wonder if the intent is being wrongly calculated in the worksheet?