Net Investment Income Tax (NIIT) EA UPDATE

IRS Affordable Care Act Tax Provision WebsiteUPDATE: Funding the Affordable Care Act through NIIT

Want to know why it is a good idea to have an Enrolled Agent (EA) as your professional tax preparer?  They are “America’s Tax Experts®!” An EA can explain, in easy-to-understand language, how the new tax code will affect you and your taxes today, and help you plan for the future, The IRS is the *enforcement arm* for the Affordable Care Act Tax collection, and the laws and reporting requirements are changing almost daily.  You want someone who is looking out for you and your best interest (no pun intended). 

You want someone who can answer “What does this mean to me for 2013 taxes and in the future?”   And while some may not find the changes confusing or mentally cumbersome, others will. If you can’t answer “What does this mean to me“, this may be the push you need to pick up the phone and call your tax preparer or  US-TaxLaws.com at 1-619-589-8680.

Other than these 20 FAQs, is there additional information available about the Net Investment Income Tax?

Yes. You can find additional information about the NIIT in the 2013 final regulations and in a new 2013 proposed regulation published on Dec. 2, 2013.

22. The proposed regulations that were published on Dec. 5, 2012, are effective for tax years beginning after Dec. 31, 2013, but the Net Investment Income Tax went into effect on Jan. 1, 2013. May I rely on those proposed regulations, the proposed regulations published on Dec. 2, 2013, and/or the final regulations, also published on Dec. 2, 2013, for guidance on the Net Investment Income Tax during 2013?

Yes. For taxable years beginning before Jan. 1, 2014 (e.g., calendar year 2013), taxpayers may rely on the 2012 proposed regulations (published on Dec. 5, 2012), the 2013 proposed regulations (published on Dec. 2, 2013), or the 2013 final regulations (published on Dec. 2, 2013) for purposes of completing Form 8960. However, to the extent that taxpayers take a position in a taxable year beginning before Jan. 1, 2014 that is inconsistent with the final regulations, and such position affects the treatment of one or more items in a taxable year beginning after Dec. 31, 2013, then such taxpayer must make reasonable adjustments to ensure that their Net Investment Income Tax liability in the taxable years beginning after Dec. 31, 2013 is not inappropriately distorted. For example, reasonable adjustments may be required to ensure that no item of income or deduction is taken into account in computing net investment income more than once, and that carryforwards, basis adjustments and other similar items are adjusted appropriately.

FEEL LIKE TALKING TO AN EXPERT?  WHAT MAKES ENROLLED AGENTS SO SPECIAL?

“Enrolled agents are qualified tax professionals. Many states have no special licensing laws for tax preparers, but enrolled agents receive their authority from the federal government. “Enrolled” refers to the fact that the federal government licenses these professionals. They are “agents” because they are authorized to appear in place of a taxpayer in dealing with IRS audits, collections, or appeals. Enrolled agents earn their credential by passing a comprehensive exam administered by the IRS that covers individual, business, estate and trust taxation, representation and more”¹ Read more at Questions to Ask When Selecting A Tax Preparer.

Tax information is not tax advice. Since tax laws are always changing, speak with your tax professional before making decisions. If you need to speak with a tax professional, give us a call today at 619-589-8680.

Image credit: IRS
Content source: IRS
¹National Association of Enrolled Agents