Net Investment Income Tax Information (Form 8960) - What is Allocable to Investment Income?

amos2b
amos2b Member Posts: 2 Newcomer
edited March 15 in Income

This is my first time having to complete the Net Investment Income Tax Information (Form 8960) because of capital gains on an investment.

FreeTaxUSA automatically put in the dollar values in the section I copied and pasted below. Where did FreeTaxUSA get those dollar amounts? Can you explain how they come up with those dollar amounts? I want to make sure they are correct.

Deductions and Additional Modifications Allocable to Investment Income
Enter any of these itemized deductions on your federal Schedule A that are allocable to investment income. Any reasonable method can be used to allocate how much of your itemized deductions relate to your investment income.

You've entered $10,000 of allowable state income tax.
Enter any state income tax paid in 2024 that is allocable to net investment income: $2,118
One way of allocating state taxes is to do a ratio of your investment income to your total income. If you use this method, you could allocate $2,118 to your investment income.

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Answers

  • KeriC
    KeriC FreeTaxUSA Agent Posts: 186

    Please contact Support from within your account to ask them to explain the values and calculations for Form 8960. They will be able to review your return and privately discuss specific amounts on your return with you.

  • Taxist
    Taxist Member Posts: 1 Newcomer

    Once you determine the ratio, do you multiple the ratio by your entire state tax amount?


    isn’t that amount already deducted from your income if you itemized? Or is it only the amount that is above the SALT cap that you can then allocate to investment expense because you couldn’t already deduct it?

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