Form 8960, S&L deduction

[paradisoj]

I believe that I am entitled to a S&L deduction on form 8960, Part II line 9b. That line is currently left blank by TurboTax. How/where do I input the appropriate information so that an expense is reflected.  Thanks.

[AmyC]

Correct, Form 8960 contains state and local taxes on line 9b. It is carried there from the worksheet. The program pulls the numbers and populates them. Perhaps you have a limitation? Can you clarify where you paid the tax, what forms show it, any other information to help you?

  About Form 8960, Net Investment Income Tax Individuals, Estates, and Trusts states: Line 9b—State, Local, and Foreign Income Tax

Include state, local, and foreign income taxes you paid for the tax year that are attributable to net investment income. Form 1040-NR filers include only taxes paid for the U.S. residency period of the tax year. Sales taxes aren’t deductible in computing net investment income. You may not take a deduction for any foreign income taxes paid for the tax year if you took a credit for any portion of them. See section 275(a)(4).

You can determine the portion of your state, local, and foreign income taxes allocable to net investment income using any reasonable method. See Reasonable method allocations, earlier, and Deductions subject to AGI limitations under section 67 or section 68, later.

[paradisoj]

No numbers are pulling onto the worksheet. I have S&L taxes being withheld from payroll.They were inputted with the W-2 info and are reflected as payments on the NYS return. The investment income is recorded in the dividend, interest and capital gain sections. They are properly reflected on form 8960 and are resulting in the tax however they are not reflected in the worksheet for the S&L deduction. 
for limitations, S&L taxes were limited to 10,000.  Actual amount of tax withheld was in excess of 10,000.  Also the standard deduction is being taken. 
What would you suggest as next steps?

thanks

[Harry-Li]

I have the same issue with my return on 2022 and 2020; it didn't deduct the state and local investment tax from 8960. It did for my 2021 return.  Please look into this. 

[paradisoj]

Harry - I am a member like you. I posted my issue 2 weeks ago and no one has gotten back to me. 

[Jason-R]

I had this same issue.

Here is my theory as to why it is actually OK for me.   Last year, I wanted to take the standard deduction, but then TurboTax recommending itemizing even though the deduction was slightly less than the standard, but then on top of that I got this line 9b reduction in NIIT that made me get a bigger refund.  

This year, the standard deduction got bigger, so for me it is just flat out better, even without line 9b.    

My understanding is that you can only fill in 9b if you itemize.   You could test this on your return by changing between itemized and standard.

[pumpkinB]

I have the same problem as the person who you replied to. The worksheet for form 8960 line 9b is blank. I suspect it is because I did not itemize deductions. How can I enter the correct amount for this line? Or is this a bug in TurboTax?

[tietzpa]

I have the same issue; state taxes are not carrying over to the 8960 worksheet. I used the standard deduction,  but also tried itemized deduction and it still did not work.

[tietzpa]

I have the same issue, state taxes are not carrying over to the worksheet or 8960 form, and cannot be manually entered. 

[DaveF1006]

To clarify, what state?

[tietzpa]

NJ. But I think I found the answer to my problem. I did not itemize my deductions.; when I faked an expense to allow me to itemize, the state tax carried over. Also did some research and the consensus is that you cannot deduct state tax on line 9b if you do not itemize. 

[IsabellaG]

You are correct that if you do not itemize deductions, you cannot deduct the state tax allocable to investment income.

 See the instructions for Form 8960, under Part II—Investment Expenses Allocable to Investment Income and Modifications. State, local, and foreign income taxes are deductible  if properly deducted on your return when calculating your U.S. regular income tax. 

If you don't claim a deduction for these taxes by itemizing, you can't claim them on line 9b of Form 8960.