Form 8096 line 4a and 4b

[nirbhee]

I had passive income of $13000 for rentals, and a loss of -9000 in businessMy MAGI is above the threshold so I have to pay the NIIT.

TT fills in Form 8960 automatically with 

4a as 13000

4b as 9000

c Combine lines 4a and 4b = 22000

Then I am taxed 3.8% on 22000

BUT 9000 was the loss, not income, why does it not get added as an adjustment as negative, instead gets added as a positive and increases my tax. It is negative in the worksheet. 

Thanks!

[Mike9241]

That is incorrect. the instructions for 4a & 4b for form 8960

Line 4a—Income From Trades/Businesses, Rental Real Estate, Royalties, Partnerships, S Corporations, and Trusts
Enter the following amount from your properly completed return.
• Schedule 1 (Form 1040), line 3.
• Schedule 1 (Form 1040), line 5.

Use line 4b to adjust the amounts included on line 4a, for gains and losses that are excluded from the calculation of net investment income. Enter the amount of gains (as a negative number) and losses (as a positive number). Enter the net positive or net negative amount for the following items included on line 4a that aren’t included in determining net investment income.

Net income or loss from a section 162 trade or business that’s not a passive activity and isn’t engaged in a trade or business of trading financial instruments or commodities.

so 4a should be $4K ($13K-$9k), 4b should be $9K as a positive number making line 4c $13K  

not sure what worksheet you entered the business loss on. check your entries. 

also check what's on schedule 1 lines 3 and 5

[nirbhee]

Got it, makes sense to me now, thank you!!