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Partnerships/S-Corps and NIIT

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  • Partnerships/S-Corps and NIIT

    This my first year of being blessed (?) with K1s. I like to do everything myself and I will be running it by a tax professional next week but always like to run through everything myself in H&R Block to make sure I understand it. My question is specifically over Form 8960 and Lines 4a-4c. Line 4a contains the income from the various s-corps/partnerships but there is nothing on line 4b. From my understanding, my thinking is that we would be considered a non-section 1411 trade or business and the amount on line 4a would be a negative number on line 4b. I really don't see any way to answer various questions on H&R Block that changes this. I can go in and manually input a number on line 4b. Anybody have any thoughts on this?

  • #2
    Line 4b will populate if you tell the software that those K-1s are non-passive. Passive income is subject to the NIIT and K-1 income can be either passive or non-passive so you need to indicate it somewhere.

    This exact thing is something I check for on prior returns for new clients because there's an erroneous belief out there that S-corp flow through income is considered passive.

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    • #3
      Thanks for your reply. That's so strange. I double checked that non-passive is checked on everything. Almost all of the income on each is reported under ordinary income and after I input it it asks me if it's passive or non-passive and I have non-passive checked on all of them and I can't get 4b to populate.

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      • #4
        Dumb question. What software program are you using? I am trying to learn more. I have a CPA that I like and trust but I have been too lazy. I need to:
        1. read more
        2. run the numbers myself so that I know what questions to ask
        H and R block software?
        Thanks,
        TB

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        • #5
          I'm using H&R Block.

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