how to eliminate Form 8959 calculation for 0.9% additional Medicare Tax

[samsjj88]

Hello, I run into a problem this year (2021 tax), per W-2, the additional 0.9% Medicare tax was already done correctly, but somehow on the section, Part V "withholding reconciliation, it did not take the credit the amount from W-2 box 6, and still transfer the 0.9% additional amount to Form 1040, line 25c.  Ends up the tax return show the extra tax payment due.

Looks like something need to be done from ProSeries?

Or, anyone know how to correct this??? 

[jeffmcpa2010]

If you look at the 1040 lines 25 a b and c the additional medicare withheld should be on line c.

[samsjj88]

Yes.  It is correct if there is really a due for the additional 0.9% Medicare tax needed to be applied to the tax return.

But on the W-2 show a correct amount already which included all "standard & additional tax" Medicare Tax amount. 

Form 8959 show the calculation and but did not reconcile and apply only the difference, if any, to line 25 c.  ..... It went ahead apply the full 0.9% additional tax to Form 1040.  That means we add extra and not necessary amount for the tax due.

Is this a tax program error????

[dkh]

Funny you should ask about F8959, because I just finished reviewing a clients for accuracy.  PS Professional is calculating correctly.    You should have information in Part I and Part V.

[dkh · Accepted solution]

Are you following the math.... Part I will calculate the actual tax due and flows to Sched 2 Line 11.  Part V will calculate a withholding credit that flows to F1040 line 25c.  These two amounts should net out to either a zero balance or credit amount depending on filing status.

[rbynaker]

I like that it's got its own box now instead of just being lumped in with federal withholding.

I would be surprised if the software does not do this correctly.  The tax withheld on the W-2 and the tax calculated on the 8959 are not always the same.  They may be different depending on filing status and/or other income on the return.  The math is easy enough though.  If you think the software is wrong just walk through the tax calculations on the form.  Then manually subtract the 0.0145% "regular" Medicare tax from the total Medicare withholding on the W-2s to arrive at Additional Medicare withholding.

Edit: Doh!  Got a text I had to reply to and Denise jumped in front of me while I was writing this! 🙂

[qbteachmt]

I think this might be where you are confused: "Form 8959 show the calculation and but did not reconcile and apply only the difference, if any, to line 25 c. ..... It went ahead apply the full 0.9% additional tax to Form 1040. That means we add extra and not necessary amount for the tax due."

It did not apply only the difference because line 25c is for amount withheld. It is for Payments made and not Tax computed. From: https://www.irs.gov/instructions/i1040gi

"If you had Additional Medicare Tax withheld, include the amount shown on Form 8959, line 24, in the total on line 25c. Attach Form 8959."

The tax computed will come from Schedule 2, line 11, to the 1040 Line 23.

Line 24 is Total tax.

Line 33 is total payments, credits, withholdings, etc.

Hope that helps.

[samsjj88]

Thank you!!

I kept on trying to find problem on Form 8959 and totally forgot to check the "payment & credit" section!!

Everything is correct!!  My mistake!! 

😞

[dkh]

A happy ending - hooray!