Section 911. If you exclude amounts from income under

section 911, to calculate your MAGI, you must increase your AGI by the excess of the amount excluded from income under section 911(a)(1) over the amount of any deductions (taken into account in computing AGI) or exclusions disallowed under section 911(d)(6) for the amount excluded from income under section 911(a)(1). Use the Line 13—MAGI Worksheet in these instructions to compute your MAGI.

CFCs and PFICs. If you own, directly or indirectly, stock in a CFC or PFIC other than certain CFCs and PFICs held in a section 1411 trade or business or PFICs marked to market under section 1296 or any other provision, to calculate your MAGI, you may need to make certain adjustments to your AGI, as provided in Regulations section 1.1411-10(e)(1). Generally, these adjustments include the following.

• CFCs and QEFs without a section 1.1411-10(g) election in effect.

Increase AGI by the amount of any distributions described in section 959(d) or 1293(c) included in your NII as a dividend (not applicable to tax years beginning before 2014).

If you don’t own (directly or indirectly) any

TIP interests in CFCs or PFICs, and don’t exclude any

foreign earned income on Form 2555, Foreign Earned Income, enter your AGI from Form 1040 or 1040-SR on line 13 of Form 8960.

Line 14—Threshold Based on Filing Status

If you don’t own (directly or indirectly) any

TIP interests in CFCs or PFICs, and don’t exclude any

foreign earned income on Form 2555, Foreign Earned Income, enter your AGI from Form 1040 or 1040-SR on line 13 of Form 8960.

1. Decrease AGI by the amount of any section 951(a), 951A, or 1293(a) inclusions.

2. Increase AGI by the amount of any distributions described in section 959(d) or 1293(c) included in your NII as a dividend.

3. Increase or decrease AGI (as appropriate) by the amount of any adjustment to gain or loss on the disposition of the CFC or QEF that results in an adjustment to your MAGI.

4. Increase or decrease AGI (as appropriate) by the amount of any adjustment to gain or loss on the disposition of an interest in a domestic partnership or S corporation that holds a CFC or QEF that results in an adjustment to your MAGI.

5. Increase or decrease AGI (as appropriate) by the amount of any adjustment to investment interest expense under Regulations section 1.1411-10(c)(5) that’s taken into account in computing MAGI.

6. Increase or decrease AGI (as appropriate) by the amount reported to you in box 14, code H, of Schedule K-1 (Form 1041) that requires a MAGI adjustment.

• CFCs and QEFs held in a section 1411 trade or business or with a section 1.1411-10(g) election in effect.

• 1291 funds.

1. Increase AGI by the amount of any excess distributions derived from a PFIC that are dividends included in MAGI but not included in gross income for regular income tax purposes.

2. Increase AGI by the amount of any gain treated as an excess distribution under section 1291 included in MAGI but not included in gross income for regular income tax purposes.

The threshold amount is based on your filing status.

Line 10—Worksheet for Traders in Financial Instruments That Maintain More Than One Trade or Business

Use this worksheet to determine the amount on line 10.

1. Enter the total amount from Schedule SE (Form 1040), line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. (a) If the amount on Schedule SE (Form 1040), line 3, is zero or greater, you can’t use the expenses from your trade or business to reduce your investment income. Stop here. (b) If the amount on Schedule SE (Form 1040), line 3, is a negative amount, enter your

expenses from your trade or business of trading in financial instruments or commodities (entered as a positive amount) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2(b).

3. Add line 1 to line 2(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

(a) If the amount on line 3 of this worksheet is zero or less, include the trade or business

expenses (line 2(b) of the worksheet) on Form 8960, line 10. (b) If the amount on line 3 of this worksheet is a positive number, convert the amount from

Schedule SE (Form 1040), line 3 (line 1 of this worksheet), into a positive number and include it on Form 8960, line 10.

22 Instructions for Form 8960 (2025)

Line 13—MAGI Worksheet

1. Enter your adjusted gross income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.

2. Foreign earned income exclusion: (a) Enter your foreign earned income exclusion (from

line 42 of Form 2555) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b) Enter the deductions reported on line 44 of Form

2555 allocable to your foreign earned income exclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( )

(c) Combine lines 2(a) and 2(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.

3. Adjustments for certain CFCs and certain PFICs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.

4. Enter the sum of line 1, line 2(c), and line 3. (Enter this amount on Form 8960, line 13.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.

A bankruptcy estate of an individual enters $125,000 and uses Form 8960, lines 13–17, to compute the tax.

If you’re a U.S. citizen or resident married to an NRA, your filing status is married filing separately unless you made an election under section 6013(g) or 6013(h) to file jointly with your NRA spouse. Note that if you made a section 6013(g) or 6013(h) election to file jointly with your NRA spouse, but don’t also elect to apply the joint return election for NIIT purposes, then, for NIIT purposes, you’ll file as married filing separately and need to use the applicable threshold amount. See Election To File Jointly With Nonresident Spouse , earlier.

Line 17—Net Investment Income Tax for Individuals

• Form 1040 or 1040-SR filers: Include this amount on Schedule 2 (Form 1040), line 12.

• Form 1040-NR filers: Include this amount on the line of your U.S. residency statement corresponding to Schedule 2 (Form 1040), line 12, and see the Instructions for Form 1040-NR for the amount to report on your tax return.

See Dual-status individual , earlier.

Estates and Trusts Estates and trusts complete lines 18–21.

Line 18b—Deductions for Distributions of Net Investment Income and Charitable Deductions

The undistributed NII of an estate or trust (reported on line 18c) equals its NII (reported on line 18a) reduced by the NII included in the distributions to beneficiaries deductible by the estate or trust under section 651 or 661, and by the NII for which the estate or trust was entitled to a

section 642(c) deduction, in each case as calculated under Regulations section 1.642(c)-2 and the allocation and ordering rules under Regulations section 1.662(b)-2. In the case of the S portion of an ESBT, as defined by section 1361(e), NII is further reduced by the NII for which the trust was entitled to a section 170 deduction. See section 641(c)(2)(E).

Regulations section 1.1411-3(e) applies the class system of income categorization, generally embodied in sections 651 through 663 and related regulations, to arrive at the trust’s NII reduction in the case of distributions that are comprised of both NII and net excluded income items. See Regulations section 1.1411-3(e) for more information and examples on the calculation of undistributed NII.

Charitable deduction. Report the amount of NII distributed to beneficiaries of the estate or trust and the amount of NII allocated to distributions to charity under section 642(c). The amount of the deduction for NII distributed to charities under section 642(c) is the amount of the NII allocated to the charity in accordance with Regulations section 1.642(c)-2(b) and the allocation and ordering rules under Regulations section 1.662(b)-2. In the case of the S portion of an ESBT, as defined by section 1361(e), report the amount of NII distributed to beneficiaries of the estate or trust and the amount of NII allocated to distributions to charity under section 170. See section 641(c)(2)(E).

Form 1041, Schedule A, can be used as a

TIP worksheet to calculate the amounts of NII

allocable to charitable distributions by including on line 2 both tax-exempt income and the difference between adjusted total income and the trust’s NII (Form 8960, line 18a).

The amount of the deduction for NII distributed to

TIP beneficiaries should equal the sum of NII reported

to the beneficiaries on their respective Schedules K-1 (Form 1041).

Note: In general, the deduction for distributions of NII may not exceed the taxable income distributed to the beneficiary for regular income tax purposes. However, in the case of an estate or trust that owns an interest in certain CFCs or PFICs, the distribution of NII can exceed

Instructions for Form 8960 (2025) 23

the distribution of taxable income when the amount of distributions exceeds distributable net income for regular income tax purposes.

Form 1041, Schedule B, can be used as a

TIP worksheet to calculate the income distribution

deduction for NIIT purposes by replacing line 1 with the trust’s NII (Form 8960, line 18a) and including on line 2 both adjusted tax-exempt interest and the difference between line 1 and the trust’s NII (Form 8960, line 18a).

Line 18c—Undistributed Net Investment Income

Don’t enter a negative number. If negative, enter zero.

Line 19a—Adjusted Gross Income (AGI)

If the estate or trust doesn’t own an interest in a CFC or PFIC, enter its AGI for regular income tax purposes.

If the estate or trust owns an interest in a CFC or PFIC, it may need to make adjustments. See Line 13—Modified Adjusted Gross Income (MAGI), earlier.

Line 19b—Highest Tax Bracket for Estates and Trusts

See the instructions for Form 1041, Schedule G, line 1a, and the instructions for Form 1041-QFT, line 12, for the dollar amount at which the highest tax bracket begins for the tax year and enter that amount here.

In the case of a QFT, see Special computational rules for qualified funeral trusts (QFTs) , earlier, to determine the amount to report on Form 8960, line 19b.

Line 21—Net Investment Income Tax for Estates and Trusts

• Form 1041 filers: Include this amount on Form 1041, Schedule G, line 5, and see the instructions there.

• Form 1041-QFT filers: Include this amount on Form 1041-QFT, line 15, and see the instructions there.

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue

laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated average time is:

Recordkeeping . . . . . . . . . . . . . . 1 hr., 01 min. Learning about the law or the form . . . . . . . . . . . 6 hr., 04 min. Preparing the form . . . . . . . . . . . 1 hr., 47 min. Copying, assembling, and sending the form to the IRS . . . . . . . . . . . . . . . . . . 20 min.

Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions.

You can send us comments through IRS.gov/ FormComments . Or you can write to:

Internal Revenue Service Tax Forms and Publications 1111 Constitution Ave. NW, IR-6526 Washington, DC 20224.

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Although we can’t respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. We can’t answer tax questions sent to the above address.

24 Instructions for Form 8960 (2025)

Index

D Deduction recoveries 14 Definitions 1 Disposition of Interest 5 Disposition of Property, gains and

losses 8

Individuals 22 Index 25 Individuals, application of Net

I Income Threshold, Estates and

Trusts 23 Income Thresholds,

E Economic Grouping 5 Election for Reg 1.1411–10(g) 6 Election, Form 8814 13 Elections for Investment

Investment tax 2 Instruments or Commodities 6, 7

P Passive Activity 4

R Recordkeeping 2

S Section 1291 12 Section 1411 Net Operating

Loss 13 Self-charged Interest 16

T Tax Computation 22

Income 7 Estates and Trusts, application of

J Joint-filed returns 2

M Mark-to-market, Passive Foreign

Investment Company 12

Net Investment tax 3 Expenses of Investments 16

25