I came across this 8960 while reading through the instructions for 2013 f1040...
My wife is the one who files the IRS return. She is a USC in Canada as a PR.
I am a Canadian Citizen only so therefore an NRA for her return. We have two dual citizen children that she files for the ACTC. She files HoH
She has:
- all income is in Canada from wages and mat leave, we use f1116 for FTC
- spousal RRSP that gets 8891 and FBAR
- joint day to day bank accounts, checking and savings
- joint bank savings account that generates maybe $50 per year in interest:
we show this on the appropriate line 1040, schedule B and an f1116
- she files as HoH using me as NRA
Is that $50 interest from the savings account the type of investment income that would generate the need for form 8960?
If I understand correctly: as long as her income is below the threshold of $200,000 for HoH or $125,000 for MFS then this NIIT does not apply and therefore, we don't need to include f8960?
Thanks,
Frank
Question about f8960 - Net Investment Income Tax
Moderator: Mark T Serbinski CA CPA
Hi Frank,
I agree except, I think the "modified adjusted gross income", MAGI threshold is $125,000 for both MFS and HoH status. I read in the draft instructions (note the final instructions aren't released yet) that if you are married to a NRA, then the filing status is MFS for 8960 purposes - unless your wife choses to include you (treat you as a resident alien) and file MFJ - only then can you get the $250,000 threshold for 8960.
Maybe this will change when the final instructions come out.
The $50 of interest would be investment income for NIIT purposes - that would be a $2 tax.
If you are below the applicable MAGI threshold, you don't even need to include the form with the 1040.
Best Regards,
I agree except, I think the "modified adjusted gross income", MAGI threshold is $125,000 for both MFS and HoH status. I read in the draft instructions (note the final instructions aren't released yet) that if you are married to a NRA, then the filing status is MFS for 8960 purposes - unless your wife choses to include you (treat you as a resident alien) and file MFJ - only then can you get the $250,000 threshold for 8960.
Maybe this will change when the final instructions come out.
The $50 of interest would be investment income for NIIT purposes - that would be a $2 tax.
If you are below the applicable MAGI threshold, you don't even need to include the form with the 1040.
Best Regards,
I started reading through the draft instructions, and at this point I understand as you do with regards to my USC wife being married to me - an NRA…
She will file her return as HoH using me as NRA, however, for the purpose of f8960, it looks like she is considered MFS and the $125,000 threshold applies.
I also understand that you need to have a MAGI that is over the threshold AND a net investment income in order to be subject to NIIT. So, as you said in this case, she has the NII but her MAGI is under therefore no requirement for 8960.
So, we are safe from this form until she makes over the threshold amount, if ever!
She will continue to show her interest on line 8a form 1040, schd B and a form 1116 for the credit…
She will file her return as HoH using me as NRA, however, for the purpose of f8960, it looks like she is considered MFS and the $125,000 threshold applies.
I also understand that you need to have a MAGI that is over the threshold AND a net investment income in order to be subject to NIIT. So, as you said in this case, she has the NII but her MAGI is under therefore no requirement for 8960.
So, we are safe from this form until she makes over the threshold amount, if ever!
She will continue to show her interest on line 8a form 1040, schd B and a form 1116 for the credit…