Tax Q&A U.S. Tax Forms & Filing What Happens If I Never Filed Form 8960 and Owed the NIIT?

What Happens If I Never Filed Form 8960 and Owed the NIIT?

Q: What Happens If I Never Filed Form 8960 and Owed the NIIT?

You file an amended return on Form 1040-X , with Form 8960 attached, and pay the tax, plus interest and a failure-to-pay penalty of 0.5% of the unpaid amount for each month it remains unpaid, up to a maximum of 25%. If your original return was filed on time, the failure to file penalty does not apply because the return itself was filed. What it costs: Failure to pay penalty: 0.5% of the unpaid tax per month, to a 25% maximum. Interest: Set quarterly and compounded daily, 7% for the fourth quarter of 2026. Failure to file penalty: None, if the return was filed on time. The tax itself: 3.8% of the lesser of your net investment income or your MAGI excess, so the balance is often small. Your situationWhat you fileWhat appliesReturn filed, Form 8960 left outForm 1040-X with Form 8960 attachedFailure to pay penalty and interestReturn never filedThe delinquent return with Form 8960Failure to file penalty as wellSeveral years affectedStreamlined Filing Compliance ProceduresThree years of returns, six years of FBARs If several years are affected: Three years of returns: Delinquent or amended, for the most recent three years whose due date has passed. Six years of FBARs: For the most recent six years, whose FBAR due date has passed. Form 14653: A signed statement certifying that the failures were non-willful. The usual cause is the Foreign Earned Income Exclusion : the salary you excluded is added back when MAGI is measured, so a return with little taxable income can still clear the threshold. For the form itself, see our Form 8960 guide ; for catching up, see our Streamlined Filing guide .

You file an amended return on Form 1040-X, with Form 8960 attached, and pay the tax, plus interest and a failure-to-pay penalty of 0.5% of the unpaid amount for each month it remains unpaid, up to a maximum of 25%. If your original return was filed on time, the failure to file penalty does not apply because the return itself was filed.

What it costs:

Failure to pay penalty: 0.5% of the unpaid tax per month, to a 25% maximum.
Interest: Set quarterly and compounded daily, 7% for the fourth quarter of 2026.
Failure to file penalty: None, if the return was filed on time.
The tax itself: 3.8% of the lesser of your net investment income or your MAGI excess, so the balance is often small.

Your situation	What you file	What applies
Return filed, Form 8960 left out	Form 1040-X with Form 8960 attached	Failure to pay penalty and interest
Return never filed	The delinquent return with Form 8960	Failure to file penalty as well
Several years affected	Streamlined Filing Compliance Procedures	Three years of returns, six years of FBARs

If several years are affected:

Three years of returns: Delinquent or amended, for the most recent three years whose due date has passed.
Six years of FBARs: For the most recent six years, whose FBAR due date has passed.
Form 14653: A signed statement certifying that the failures were non-willful.

The usual cause is the Foreign Earned Income Exclusion: the salary you excluded is added back when MAGI is measured, so a return with little taxable income can still clear the threshold. For the form itself, see our Form 8960 guide; for catching up, see our Streamlined Filing guide.

Last updated on September 3, 2026