What is Form 8960?
Form 8960 calculates the 3.8% Net Investment Income Tax (NIIT). It applies to the lesser of net investment income or the amount by which modified AGI exceeds the threshold: $200,000 for Single, $250,000 for MFJ. Investment income includes taxable interest, ordinary and qualified dividends, capital gains, rental income, and other passive income.
SupportedKey Lines
| Line | Description | Destination |
|---|---|---|
| Line 1-3 | Interest + dividends + capital gains | Components of NII |
| Line 8 | Net investment income | Total NII |
| Line 11 | MAGI minus threshold | Excess MAGI |
| Line 13 | NIIT (3.8% x lesser of Line 8 or Line 11) | Schedule 2 Line 12 |
How PaisaTax Handles It
- Fully computed from interest (Schedule B), dividends (1099-DIV), and capital gains (Schedule D)
- MAGI threshold compared against filing-status-specific amount
- Lesser-of test ensures tax applies only to the smaller of NII or MAGI excess
- Flows to Schedule 2 Line 12, adding to total tax on Form 1040
Common Situations
- Investment income below MAGI excess: $30K NII with $50K MAGI excess — tax is 3.8% of $30K = $1,140.
- MAGI excess below NII: $80K NII with $20K MAGI excess — tax is 3.8% of $20K = $760.
- Below threshold: Single filer with $190K MAGI — no NIIT regardless of investment income.