Social Security & Net Investment Tax

[Agathocles]

Why does turbotax software include social security income in calculating Net Investment Tax?

My understanding is social security income is not included in calculating Net Investment Tax.

[tagteam]

Your social security income is included in the tax computation on Form 8960 (Part III).

See https://www.irs.gov/instructions/i8960#en_US_2022_publink10003491

If you didn’t exclude any amounts from your gross income under section 911 and you don’t own a CFC or PFIC, your MAGI is your AGI as reported on Form 1040 or 1040-SR. 

[NCperson]

it is included in the calculation of NIIT.

It is not part of the numerator (which is the interest income)

Look at the form..look at Line 13, which is MAGI.  With few exceptions, that is AGI from form 1040 Line 11.  And AGI includes the taxable portionof social security income. 

https://www.irs.gov/pub/irs-pdf/f8960.pdf

[NCperson]

@Agathocles is this FAQ from the IRS hanging you up? this FAQ is referring to what does not get included on Line 8 of Form 8960.  Turbo Tax does not include SS benefits on line 8 per the IRS directions. 

9. What are some common types of income that are not Net Investment Income?

Wages, unemployment compensation; operating income from a nonpassive business, Social Security Benefits, alimony, tax-exempt interest, self-employment income, Alaska Permanent Fund Dividends (see Rev. Rul. 90-56, 1990-2 CB 102) and distributions from certain Qualified Plans (those described in sections 401(a), 403(a), 403(b), 408, 408A or 457(b)).

[Agathocles]

True SS income is not included on line 8 of 8960; however, SS income is included on line 13 of form 8960.

Probably your answer is why this is a FAQ.  Hence, yes SS income is included in the calculation of Net investment tax. Thanks!