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Excess social security and tier 1 RRTA tax withheld on the Schedule 3

by Intuit Updated 4 months ago

ProSeries will automatically calculate the Schedule 3 line 10 if the tax return contains excess social security or tier 1 RRTA tax withheld. There are two common scenarios that trigger this calcualtion:

Scenario 1: Multiple W-2's during the year

If the taxpayer or spouse had more than one employer during the tax year and the total Social Security tax or Railroad Retirement Tax Act (RRTA) tier 1 tax withheld was over the limit for that tax year, the program automatically calculates the amount of excess social security tax or RRTA tier 1 tax withheld.

Scenario 2: Spouses' W-2 isn't marked correctly

This issue can also happen if the spouse W-2 doesn't have the Spouse's W-2 box checked. Review the W-2 worksheets to make sure they're entered correctly and remove any W-2 worksheets that are no longer needed.

The employer withheld twice the amount of Social Security (FICA) and Medicare. However, the difference doesn't show up on the return as a credit.

Why is this happening?

According to IRS Pub. 505 and the IRS instructions for Form 1040, if a taxpayer has more than one employer and has wages greater than the threshold, then a credit can be claimed on the 1040 return. In all other scenarios, the taxpayer will need to seek a refund from the employer. If the employer refuses, the employee may file a claim for refund using Form 843.

The Social Security (FICA) withholding limits, rates, and wage thresholds change yearly.

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