Alert for Double Check State Income Tax for NIIT
Hello!
I was about to submit my tax returns and saw this warning:
You entered $0 as the amount of state income tax paid in 2025 that is allocable to net investment income, which is different from the $139 we calculated. To change the amount you entered, go back to the Net Investment Income Tax Information (Form 8960) screen. If the amount you entered is correct, simply continue with your tax return.
I went back to the page and entered $139 at the bottom in the section that says "Deductions and Additional Modifications Allocable to Investment Income." I went back to the review, and it still said that I had put in $0 dollars and didn't match the calculation.
Where does this number even come from? And how can I get it to resolve the warning?
Best Answer
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Alright I've done some reading on the IRS website and I've come up with a conclusion: the warning is probably just a bug, especially if you were trying to do what it says without the warning disappearing. Here's my situation and what I'm going to do about it, hopefully it helps others. Here are the instructions for the form: www.irs.gov/instructions/i8960
Stats: Married, filing separately. Modified adjusted gross income is over 200k, and the applicable threshold for NIIT is 125k for this filing status (200k for married filing jointly, 200k for single or head of household), so it does apply to me.
Now the instructions for 9b are insanely complicated to me, but I was reading about some "ratio method" for computing the value they want you to put in 9b. It's what you have on line 8 of the form, divided by your AGI, multiplied by how much you paid in state/local taxes throughout the year. For me that ended up being $139, the magic number that FreeTaxUSA says I should have put there in the warning.
Soooo I went back to the form in FreeTaxUSA, threw the $139 in the bottom box that says "Deductions and Additional Modifications Allocable to Investment Income," and whaddya know, FreeTaxUSA no longer complains at me even though that same thing wouldn't get rid of the warning when I was trying last night. It still DID NOT place the value in box 9b, but I don't think it's that big of a deal. It put the value in box 10, but the total for Part 2 doesn't change whether or not it went in 9b or 10. Obviously I'm no tax professional, so do this at your own risk. I'm just going to leave it as-is and submit.
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Answers
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I'm having the same issue. Please let me know if you were able to solve the warning. Thank you!
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Seeing the same warning pop up. You can't find this form under misc, and it doesn't really tells you how this number was calculated and why its popping up.
Any help would be appreaciated.
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Having the same issue!
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Same here ….
Federal Tax Return Alerts- - yellow warning message Double Check State Income Tax for NIIT
You entered $0 as the amount of state income tax paid in 2025 that is allocable to net investment income, which is different from the $333 we calculated. To change the amount you entered, go back to the Net Investment Income Tax Information (Form 8960) screen. If the amount you entered is correct, simply continue with your tax return.
I couldn't find a way to solve it even after going to …
"Deductions and Additional Modifications Allocable to Investment Income."
& entering $333 (as per "we calculated ,,," - no explanation as to how.
Very frustrating, after hours of prep work & paying FreeTaxUSA, to get this …
"One last thing … " warning - I thought I was done and could move on.
After a little research I've concluded that it probably doesn't matter in my case as I am not itemizing and so it wouldn't give me any extra write-off anyway.
Nevertheless I am going to hold off filing until … hopefully ,,, somebody from FreeTaxUSA comments on this issue.
PS: I sent a message to Deluxe Support about the issue and included a link to this discussion - So hopefully they'll get back to us soon.
9 - - yellow warning message Double Check State Income Tax for NIIT
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Similar issue - there is no place to enter state income tax paid in 2025 that is allocable to net investment income
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Same issue here:
Double Check State Income Tax for NIITYou entered
$0
as the amount of state income tax paid in 2025 that is allocable to net investment income, which is different from the
$1,290
we calculated. To change the amount you entered, go back to the
Net Investment Income Tax Information (Form 8960)
screen. If the amount you entered is correct, simply continue with your tax return.
I'll also hold off from filing, see if any comments from FreeTaxUSA.2 -
im also facing the same issue, if anyone has heard back from freetaxusa that would be so greatly appreciated!
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Same issue here. The message keeps lingering
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Same issue here. What to do?
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Jumping in to help get attention. Got the same message. Never heard of this item before (last year for instance). Mine is only $61 though, but I'd prefer to do it right.
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From what I was reading online, the warning is related to box 9b on the form. I tried adding numbers to every box available on the Net Investment Income Tax Information screen in FreeTaxUsa, then clicking the button to view the form filled out. None of the boxes on that page update box 9b on the form.
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Same issue for me as well!
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Received a reply from Deluxe Support
…
"We’re aware of an alert currently affecting some returns and are actively working to resolve it. Based on your modified adjusted gross income being below the Net Investment Income Tax threshold, this tax does not apply to you, and the alert will not affect your return.No action is needed on your part, and you can continue with your return."
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So in my case …
"your modified adjusted gross income being below the Net Investment Income Tax threshold, this tax does not apply to you"
… and I'll now continue with my return.4 -
Same here. Nothing I do on the page modifies line 9b…
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Same issue here
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I also have the same issue. Waiting to hear back from support.
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If it’s helpful for everyone, this number isn’t actually reported on your tax return unless you make over $200,000. It’s just used for internal calculations, so if your AGI is under that, the mismatch doesn’t matter at all.
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Alert for Double Check State Income Tax for NIIT
We spend a good deal of time with this alert as well, and after we thought we were finished with taxes. We should have checked here first. It looks like a real nice way to sneak in an upgrade to Deluxe to find out it is just a glitch.
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From another post about this same subject, an admin, "MatthewD" says the following:
Hi Community,
We’re aware of an alert currently affecting some returns and are actively working to resolve it. If your income is below the Net Investment Income Tax threshold or you are claiming the standard deduction, this tax does not apply to you, and the alert will not affect your return.
A fix has been implemented in the software. Sign out of your account and sign back in and check for the alert.
Please Contact Customer Support if you need assistance.
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Well that explains why the warning was gone today then. Thanks!
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Anyone figure out how to address this if you're above the threshold? I've tried inputting it in every box in that section and nothing changes.
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The post I marked as the answer is what worked for me. If you still have a warning after following that, you may just need to contact support, I'm not sure what else there is to try. It seems like a software problem on their end.
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Were you above the threshold? If so, where did you enter the number? I thought the 'fix' was that someone wouldn't get the alert if they were under the threshold? Thanks.
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Yes. The answer explains that and what I did to compute the number myself and the box I put it in.
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I had tried that. Just to confirm, under Deductions and Additional Modifications Allocable to Investment Income/click yes for 'Do you have additional modifications to your investment expenses?'/put in the amount. I still get the alert and it still says I input in zero. In TurboTax, we are able to go into forms and just override when this happens but I don't see where we can even get into the forms here. Thanks for your help.
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This alert is related to the Net Investment Income Tax (NIIT), which is an additional tax that only applies to taxpayers whose modified adjusted gross income exceeds a certain threshold: $200,000 for Single or Head of Household filers, $250,000 for Married Filing Jointly or Qualifying Surviving Spouse, and $125,000 for Married Filing Separately. If your income is below the threshold for your filing status, this alert does not affect your return and you can simply continue filing as-is. No changes are needed.
If your income is above the threshold, the number in the warning is calculated using a ratio method based on your net investment income relative to your AGI and the state/local taxes you paid. To update this select the Misc tab and then Net Investment Income Tax (Form 8960) from the drop-down menu. Here you can update any information needed.
We are also aware that some users above the threshold are still seeing the warning even after entering the amount, and our team is actively working to resolve this. If you've followed the steps above and the alert remains, you are still able to proceed and file your return, the warning will not prevent submission.0
