Looking for a Tax Form 8960 Templates? Download it for free!

purposes of an income tax treaty between

sections 6013(g) and 6013(h),

Trusts that aren’t classified as “trusts”

the United States and that foreign country,

respectively, and related regulations.

for federal income tax purposes. For

You elect to be treated as a resident of

example:

You can make either election on an

the foreign country for purposes of

1. Real Estate Investment Trusts, and

amended return only if the tax year for

computing your U.S. income tax liability,

which you’re making the election, and all

2. Common Trust Funds.

and

tax years affected by the election, aren’t

You file Form 1040NR, U.S.

Special computational rules for quali-

closed by the period of limitations on

Nonresident Alien Income Tax Return,

fied funeral trusts (QFTs). The NIIT

assessment under section 6501.

and Form 8833, Treaty-Based Return

applies to the QFT (as defined in section

Position Disclosure Under Section 6114 or

685) by treating each beneficiary's interest

If you elect to apply a section 6013(g)

7701(b), as provided in Regulations

in that beneficiary's contract as a separate

election for NIIT purposes and later

section 301.7701(b)-7(b).

trust. Complete one consolidated Form

determine that you didn’t meet the criteria

8960 for all beneficiary contracts subject

for doing so in that tax year, your election

Dual-status individual. If you were a

to NIIT.

for NIIT purposes will have no effect that

dual-status individual — i.e., an individual

year and for all future years. However, if,

If a QFT has one or more beneficiary

who was a resident of the United States

in a later year, you meet the criteria to

contracts that have net investment income

for part of the year and an NRA for the

elect to apply your section 6013(g)

in excess of the threshold amount:

other part of the year — you’re subject to

election for NIIT purposes, you’ll be

Complete Form 8960, lines 1–12, using

the NIIT only for the portion of the year you

treated as though you did elect to apply

only the sum of the net investment income

were a U.S. resident. The relevant

your section 6013(g) election in that later

of the beneficiary contracts that have net

threshold amount isn’t reduced or prorated

year unless you file (or amend) your return

investment income in excess of the

for a dual-status individual.

for that later year to report your NIIT

threshold amount, and

If you were a U.S. resident on the last

without the election for NIIT purposes.

On line 19b:

day of the tax year, file Form 1040 and

1. Insert the number of beneficiary

attach a statement showing your income

Application to Estates and

contracts that have net investment income

for the part of the year you were a

Trusts

in excess of the threshold amount next to

nonresident. You can use Form 1040NR

the entry on the line, and

as the statement.

Domestic estates and trusts. The NIIT

2. Multiply the number of beneficiary

If you were a nonresident on the last

applies to estates and trusts that have

contracts that have net investment income

day of the tax year, file Form 1040NR and

undistributed net investment income and

in excess of the threshold amount by the

attach a statement showing your income

adjusted gross income (AGI) in excess of

threshold amount for the year and enter

for the part of the year you were a U.S.

the threshold amount. The NIIT is 3.8% of

that amount on line 19b.

resident. You can use Form 1040 as the

the lesser of:

statement.

The undistributed net investment

Example. For 2017, a QFT has a

income for the tax year, or

For more information, see Instructions

beneficiary contract with $14,000 of

The excess, if any, of AGI (as defined in

interest income and another beneficiary

for Form 1040NR and Pub. 519, U.S. Tax

section 67(e)) over the applicable

Guide for Aliens.

contract with $13,000 of dividend income.

threshold amount.

Neither contract has any properly

Election To File Jointly With

allocable deductions. The threshold

The applicable threshold amount is the

Nonresident Spouse—Section

amount for the 2017 tax year is $12,500.

dollar amount at which the highest tax

6013(g) or 6013(h)

Therefore, the QFT has 2 beneficiary

bracket in section 1(e) begins for the tax

contracts with net investment income in

year. See the instructions for Form 1041,

If you and your spouse elect to file a joint

excess of the threshold amount for the

Schedule G, line 1a, and the instructions

return under section:

year.

for Form 1041-QFT, line 13, for the dollar

6013(g) (where an NRA is married to a

amount at which the highest tax bracket

The QFT will report $14,000 on line 1

U.S. citizen or resident at the end of the

begins for the tax year.

(interest) and $13,000 on line 2

tax year); or

(dividends). Lines 12, 18a, and 19 would

6013(h) (where at least one spouse

Exception for certain domestic trusts.

each be $27,000 ($14,000 plus $13,000).

was an NRA at the beginning of the tax

The following trusts aren’t subject to the

Enter “2” on the dotted line at the end of

year, but is a U.S. citizen or resident

NIIT:

line 19b and enter $25,000 ($12,500 × 2)

married to a U.S. citizen or resident at the

Trusts that are exempt from income

on the entry line for 19b. Lines 19c and 20

end of the tax year);

taxes imposed by Subtitle A of the Internal

will be $2,000 ($27,000 less $25,000). On

you can also elect to apply the joint return

Revenue Code:

line 21, enter the NIIT liability of $76.00

election for NIIT purposes. If you made a

1. Charitable trusts and qualified

($2,000 × 3.8%).

6013(g) or 6013(h) election, but don’t elect

retirement plan trusts exempt from tax

to apply the joint return election for NIIT

Special computational rules for elect-

under section 501, and

purposes, then, for NIIT purposes, you’ll

ing small business trusts (ESBTs).

2. Charitable Remainder Trusts

file as married filing separately.

The NIIT has special computational rules

exempt from tax under section 664;

for ESBTs. In general, ESBTs compute

To make either election for NIIT

A trust or decedent's estate in which all

their NIIT in 3 steps:

purposes, use your combined items of

of the unexpired interests are devoted to

1. The ESBT separately calculates

income, gain, loss, and deduction from

one or more of the purposes described in

the undistributed net investment income of

your joint return to figure your net

section 170(c)(2)(B);

the S portion and non-S portion according

investment income and MAGI; use the

Trusts that are classified as “grantor

married filing joint return applicable

to the general rules for trusts under

trusts” under sections 671–679;

threshold amount ($250,000); and check

chapter 1 of the IRC, and then combines

Electing Alaska Native Settlement

the undistributed net investment income of

the appropriate checkbox near the top of

Funds (described in section 646);

the S portion and the non-S portion. In the

Form 8960, Part I.

Perpetual Care (Cemetery) Trusts

case of an ESBT that has an S portion and

(described in section 642(i)); and

Once you make either election, its

a non-S portion, complete lines 1–11 of

duration and termination is governed by

Instructions for Form 8960 (2017)

-2-

Instructions For Form 8960 - Net Investment Income Tax - Individuals, Estates, And Trusts - 2017 Page 2

Related Articles

Related forms

Related Categories