New Form 8960: Not as Simple as It May Seem

We have known about the new “net investment income tax” for a while now, anticipating its impact for the 2013 tax year.  IRS has just released a draft of the form on which this new tax will be calculated (Form 8960) and related draft instructions.  While the one page form appears innocuous enough, folks had better start familiarizing themselves with the nineteen pages of instructions (which include, by the way, five complex worksheets) and the concepts associated with just what is and what is not gross investment income, not to mention just what are the appropriate deductions in measuring the net taxable amount.  On the surface, many are probably thinking it’s just a simple matter of multiplying the taxpayer’s interest, dividends and gains by 3.8% and adding the result to the tax liability.

As usual, nothing which stems from the Internal Revenue Code and the related IRS regulations is ever that simple.