Instructions For Form 8960 (2015) printable pdf download

2015

Department of the Treasury

Internal Revenue Service

Instructions for Form 8960

Net Investment Income Tax—

Individuals, Estates, and Trusts

is a trade or business of trading in financial

Section references are to the Internal Revenue

Social Security benefits,

Code unless otherwise noted.

instruments or commodities. See section

Tax-exempt interest income,

1411(c)(2) and Regulations section

Income from certain qualified retirement

Future Developments

1.1411-5(a).

plan distributions, and

Income subject to self-employment

For the latest information about

Recordkeeping

taxes.

developments related to Form 8960 and

For the NIIT, certain items of investment

its instructions, such as legislation

Net investment income. Generally, net

income and investment expense receive

enacted after they were published, go to

investment income includes gross income

different treatment than for the regular

from interest, dividends, annuities,

income tax. Therefore, you need to keep

royalties, and rents, unless they are

all records and worksheets for the items

General Instructions

derived from the ordinary course of a trade

you need to include on Form 8960. Keep

or business that is not (a) a passive

all records for the entire life of the

Reminder

activity or (b) a trade or business of trading

investment to show how you calculated

in financial instruments or commodities. In

These instructions are based mostly on

basis. You will need to know what you did

addition, net investment income includes

Regulations sections 1.1411-1 through

in prior years if the investment was part of

other gross income derived from a trade or

1.1411-10, which are effective for tax

a carryback or carryforward.

business that is (a) a passive activity or (b)

years beginning after 2013.

a trade or business of trading in financial

Application to Individuals

instruments or commodities. Additionally,

Who Must File

net investment income includes net gain

U.S. citizens and residents. Individuals

(to the extent taken into account in

Attach Form 8960 to your return if Form

who have for the tax year (a) modified

8960, line 17, is greater than zero

computing taxable income) attributable to

adjusted gross income (MAGI) that is over

(individuals) or line 21 is greater than zero

the disposition of property other than

an applicable threshold amount, and (b)

(estates and trusts).

property held in a trade or business that is

net investment income, must pay 3.8% of

not (a) a passive activity or (b) a trade or

the smaller of (a) or (b) as their NIIT.

Purpose of Form

business of trading in financial instruments

The applicable threshold amount is

or commodities. To arrive at net

Use Form 8960 to figure the amount of

based on your filing status:

investment income, the above items are

your Net Investment Income Tax (NIIT).

Married Filing Jointly or Qualifying

reduced by deductions allowed against

Definitions

Widower with Dependent Child is

the income tax which are properly

$250,000,

allocable to those items of gross income

Controlled foreign corporation (CFC).

Married Filing Separately is $125,000,

or net gain. See section 1411(c) and

Generally, a CFC is any foreign

Regulations sections 1.1411-4 and

corporation if more than 50% of its voting

Single or Head of Household is

1.1411-10(c).

power or stock value is owned or

$200,000.

Passive foreign investment company

considered owned by U.S. shareholders

Nonresidents. The NIIT does not apply

(PFIC). Generally, a PFIC is any foreign

on any day during the tax year. Certain

to nonresident alien (NRA) individuals. If

corporation if at least 75% of its gross

insurance companies are considered

you are a U.S. citizen or resident married

income is passive income or an average

CFCs if more than 25% of their voting

to an NRA, your filing status will be

of at least 50% of its assets produce

power or stock value is owned or

married filing separately for purposes of

passive income or are held for the

considered owned by U.S. shareholders

determining your MAGI, net investment

production of passive income. See section

on any day during the tax year. See

income, and whether you are subject to

1297(a).

sections 953(c)(1)(B) and 957(a).

the NIIT. However, see information later

Qualified electing fund (QEF).

Excluded income. Excluded income

about certain elections to file jointly with

Generally, a QEF is a PFIC for which the

means:

NRA spouses.

taxpayer has made an election under

Income excluded from gross income in

Dual-resident individual. If you are a

section 1295(b) and the PFIC complies

chapter 1 of the Internal Revenue Code

dual-resident individual, within the

with IRS requirements for determining

(IRC),

meaning of Regulations section

ordinary earnings and net capital gain.

Income not included in net investment

301.7701(b)-7(a)(1), generally you will be

See section 1295(a).

income, and

treated as a U.S. resident for purposes of

Gross income and net gain specifically

Section 1.1411-10(g) election. An

the NIIT. However, you will be treated as

excluded by section 1411, related

election made under Regulations section

an NRA for purposes of the NIIT if:

regulations, or other guidance published in

1.1411-10(g) (section 1.1411-10(g)

You determine you would be treated as

the Internal Revenue Bulletin.

election). See

Regulations Section

a resident of a foreign country for

1.1411-10(g)

Election, later.

Examples of excluded items are:

purposes of an income tax treaty between

Wages,

the United States and that foreign country,

Section 1411 trade or business.

Unemployment compensation,

Generally, a trade or business that is

You elect to be treated as a resident of

Alaska Permanent Fund Dividends,

the foreign country for purposes of

either a passive activity for the taxpayer or

Alimony,

Jan 15, 2016

Cat. No. 53783S

Instructions For Form 8960 (2015)

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