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IRS Form 8960 TurboTax error

IRS Form 8960 is becoming a hot topic for some who are trying to file their tax return with TurboTax.  Users have been reporting an error on Line 4, different types of guidance from TurboTax and— asking why do I need to use a Net Investment Income Tax form?

Should I enter zeros? Or Delete the Form?

What is Form 8960 and why is it in my return?

The 8960 form calculates the 3.8% additional tax on investment income due to the ACA (Affordable Care Act). If you have investment income and your modified adjusted gross income (AGI) is more than $250,000 (married filing jointly), $125,000 (married filing separately), or $200,000 (all other filing statuses), then you will most likely be subject to the 3.8% additional tax.

Seems simple enough, right?

Well apparently it’s not. Our users who are filing with Turbo Tax specifically have ran into trouble. Some are reporting that they are being required to fill it out when they have no investment income and since they don’t have investment income they do not know what to enter for line 4. The problem is that any user with a taxable state tax refund will get an error message to complete the 8960  Deduction Recoveries Worksheet.

Don’t worry is on it, has been looking into the issue.  Between tips that our users have shared that they were told when calling TurboTax reps, their own internet searches and the info we have dug up —we can see that there should be a light at the end of the tunnel.

What should I do if I get an error on From 8960?

Enter Zeros:

A solution we have seen is to enter zeros in the fields the error message requests.

Delete the Forms:

Another solution some of our users have reported when calling the hotline or visiting their support site is to manually delete the forms.

We aren’t sure yet which solution will be the right one since the IRS isn’t officially accepting tax returns yet.  Either of these seem to be a great idea, but that remains to be seen.  As long as you don’t have a state income tax refund to report, deleting the form presumably should be fine, but if you do have state income tax to report now you are essentially filing without reporting it if you delete the form.

It seems the 8960 glitch is a reminder of the H&R Block problem with Form 8863 in prior years.  There was a glitch with the form that caused many problems for early filers that submitted their returns and it wasn’t caught as a problem until the testing batch was processed.  Some taxpayers with form 8863 had refunds delayed because of this glitch.  Needless to say, they were an angry group of taxpayers.

From what we have read there is a solution coming soon. The only thing is it doesn’t say when the solution will be implemented.

Additional Resources:


TurboTax Solutions

Form 8960 and State Tax Returns with TurboTax

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