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Inclusion of social security benefits in Net Income Investment Calculation on Form 8960

Before filing my 2024 taxes I would appreciate a confirmation from TurboTax that taxable Social Security benefits should be included in the MAGI on line 13 of form 8960 in the computation of the Net Income

Investment Tax which is what TurboTax is doing.

 

I've read a number of posts going back in time that contradict whether this is correct or not. The IRS documentation clearly states that Social Security Benefits are excluded from the investment tax but specific IRS documentation for line 13 is murky at best.

 

In my case inclusion of Social Security Benefits in the MAGI on line 13 of Form 8960 is the only reason why I should be liable to pay the additional tax which is considerable if required. This must be the case for many

other people using TurboTax.

 

For an individual tax payer is TurboTax 2024 correct in including Social Security Benefits in MAGI on line 13 of Form 8960 Net Income Investment Tax?

 

Thanks in advance for your clarification.

 

 

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2 Replies
Vanessa A
Employee Tax Expert

Inclusion of social security benefits in Net Income Investment Calculation on Form 8960

Yes, taxable Social Security would be included in your MAGI on line 13 of Form 8960.  According to Topic no. 559, Net Investment Income Tax "Modified adjusted gross income (MAGI), for purposes of the NIIT, is generally defined as adjusted gross income (AGI) for regular income tax purposes increased by the foreign earned income exclusion (but also adjusted for certain deductions related to the foreign earned income). For individual taxpayers who haven't excluded any foreign earned income, their MAGI is generally the same as their regular AGI."

This means that not all of your social security is included, only the amount that is on line 6b of your 1040 form. There is not a special exclusion for the taxable portion of your social security benefits. 

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Inclusion of social security benefits in Net Income Investment Calculation on Form 8960

Thanks for the quick response to my question. It seemed to me that what you said is correct but I appreciate hearing it from an knowledgeable source. 

 

I think the confusion is created by some of the summary statements from the IRS that claims that Social Security Benefits" are not "generally" included in "investment" income and on the form they are not but they are included in triggering the tax and in determining the amount payable.

 

Thanks again.

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