Why are my capital gains taxed on form 8960 and also on 1040 as they were added to my income? It seems like they are taxed twice. Is it because we have a trust?

[beverly-rea]

I would like information on the other taxes calculated on Form 8960, it seems my capital gains are taxed twice.

[MinhT · Accepted solution]

Your capital gains are not exactly taxed twice. There is income tax on the capital gains and the net investment income tax of 3.8% (calculated on form 8960). This tax is actually the Medicare contribution tax.

Please read this TurboTax article for more information:

https://turbotax.intuit.com/tax-tips/investments-and-taxes/what-is-form-8960-net-investment-income-t...

[naviator2003]

@MinhT From my research, I could find nothing that says the NIIT is the Medicare contribution tax. Could you post a source for that information?

I'm bringing this up because there is another tax of 0.9% that does relate to Medicare, that was past the around the same time as this tax. The NIIT appears to simply be a surcharge for "high" income earners that have investments on top of their regular income.

[naviator2003]

@beverly-rea  You have form 8960 because your MAGI is above a certain threshold, meaning, you're successful, and the government wants more of your income.

[Critter-3]

When Obamacare came to be they added the NIIT on the higher incomers to help pay for the program.  It is not a Medicare tax on your income directly.