Does Form 8960 apply to individuals with gross income greater than $200,000 or to individuals with gross income (excluding wages) greater than $200,000?

[al122]

Turbotax seems to be generating a form 8960 and applying a tax on all gross income above $200,000 instead of the investment income. This seems incorrect, but I wanted to verify

[ThomasM125]

The net investment tax may apply to individuals who have modified adjusted gross income over $200,000 per this excerpt from an IRS article on the matter, so the $200,000 does apply to wage income:

[al122]

Thanks! It seems like Turbotax assessed to see if my MAGI (which I assume is wage related gross income + all other income including investment income) was greater than $200,000. Once that was confirmed, then it applied the additional tax (3.8%) to my total investment income. 

I was confused because I thought this form only applied if investment income was greater than $200,000, but now I'm not so sure. Is the method turbotax used correct?

[DawnC]

Yes, TurboTax is computing Form 8960 correctly.   Form 8960 is used to calculate the net investment income tax (NIIT), a 3.8% tax on the lesser of your net investment income or the excess of your modified adjusted gross income over certain thresholds.

• You're only subject to the NIIT if you have investment income and your modified adjusted gross income exceeds specific thresholds that depend on your filing status.
• Form 8960 lists various types of investment earnings and allows for the subtraction of certain deductible investment-related expenses to determine your net investment income.
• If your net investment income is $1 or more, the form will help you calculate the NIIT you owe, which you must then report on your tax return.

Form 8960