IRS Releases New Form 8960 Instructions – Los Angeles Income Tax Planning & Income Tax Litigation Attorney Bruce Givner

by Bruce Givner on March 24, 2014

At the end of February the IRS released the final instructions for Form 8960, the Net Investment Income Tax-Individuals, Estates, and Trusts. The 20 page-long instructions come as a relief to many practitioners and taxpayers who have had to wait nearly a month after the official start of tax season on January 31.

The instructions for Form 8960 are significant for the guidance they provide taxpayers subject to the new 3.8% net investment income tax. This tax applies for taxable years beginning Jan. 31, 2013 and covers the passive income of individuals, trusts, and estates with modified gross income above certain threshold amounts. Furthermore, the net investment income tax is a surtax at a rate of 3.8% on a base of income that is the lesser of one’s (i) modified adjusted gross income over the threshold amount, or (ii) net investment income. The threshold amounts are $250,000 for married taxpayers filing jointly and surviving spouses, $125,000 for married taxpayers filing separately, and $200,000 for other taxpayers. Individuals, trusts, and estates must also report the tax on Forms 1040 (US Individual Income Tax Return) and 1041 (US Income Tax Return for Estates and Trusts).

Importantly, though, these new instructions are based on final tax code section 1411 regulations that were issued in 2013. Therefore, the instructions include certain items that will be inapplicable until tax year 2014.

Despite the lengthiness of the instructions, especially when compared to the single-page of Form 8960, itself, they are not all encompassing according to David Kirk, an attorney-advisor in the IRS Office of Chief Counsel and one of the principal drafters of the tax code section 1411 rules. However, federal rules for tax forms require they be written in a manner accessible to average taxpayers. This is one case, says Kirk, that is not suited to that.

Givner & Kaye focuses on sophisticated income tax planning and compliance, tax litigation and procedure, estate planning, and asset protection plans for individuals and businesses in Beverly Hills, Calabasas, West Los Angeles, Hollywood, and other areas of Los Angeles, Orange, Ventura, San Bernardino, Riverside and Santa Barbara Counties. Call Los Angeles Estate Planning and Asset Protection Plan Attorneys Givner & Kaye at (310) 207-8008 today.

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