Turbo Tax Business Not Computing Excess SS tax correctly with two W-2 and Schedule C income

[Servant714]

With two W-2 jobs, plus Schedule C income. One of the W-2 hits the Social Security Tax Maximum. Thus, the second W-2 Social Security Tax is Excess, which Turbo Tax Business detects and fills out the form (Schedule 3) correctly. But with the Schedule C income, it computes the Social Security Tax for that correctly, but that is excess tax too. Turbo Tax Business does not declare that excess tax anywhere. Is this a bug in the software or am I missing something or do I have to fill out a form that Turbo Tax does not fill out automatically?

[PatriciaV]

Please clarify which version of TurboTax you are using: TurboTax Online or TurboTax Desktop? If you're using TurboTax Desktop, which version? Windows or Mac?

[Servant714]

Using Turbo Tax Desktop on Windows, the Business edition. 

[AmeliesUncle]

Go back and check if you accidently said the Schedule C or the W-2s were owed by the spouse.

[VolvoGirl]

Still not clear.  Are you using the Windows Home & Business version for personal returns with Schedule C OR the separate Windows Business program?  I don't think the Business program does schedule C.    

Are you married?  Yes make sure all the W2s and sch C are assigned to the right spouse.  

Are you sure Schedule SE (for the tax on schedule C) is adding in the full social security tax?  You still pay SE tax on the Medicare part.   If you also have W2 income, you have to break out the Social Security and Medicare taxes. Only the Social Security part maxes out.

The SE tax includes what you already paid in from your W2 so your schedule SE tax will only be the difference up to the max amount of $10,453.20 for social security. The max for social security for 2024 is 6.2% of wages plus schedule C net profit up to $168,600.    Medicare is 2.9% (both er & ee parts) of all wages & schedule C profit - no max.

[Servant714]

I am using Window Desktop Home & Business. 

as a test, I created a new return with just one person (single), gave them the maximum social security tax ($10,453.20) on a W-2 and then I filled out a schedule C having $10,000 profit. Turbo Tax calculates the Schedule SE based on Schedule C correctly. But it has the full amount of both the W-2 Social Security tax and the Schedule SE social security tax on the return. No excess social security tax is calculated nor on the return anywhere. Thus, this single person has more than the yearly amount of social security tax maximum of $10,453.20 paid to the government. Should Turbo Tax have declared the amount above $10,453.20 as excess?

[VolvoGirl]

I have Windows H& B too.

In your test return did you enter 2 W2s?  Because the Schedule SE accounts for the max SS on the W2.  I entered 1 W2 for the max and  entered 10,000 for schedule C.  I didn't get any excess SS because it entered the W2 168,600 on line 8a so line 10 was blank and only had the $268 Medicare on line 11.  What are on your SE lines?  

So be sure  both W2s are for the same person.   No one else has posted this before.   Try updating  your program.  Go up to Online-Check for Updates.  

[VolvoGirl · Accepted solution]

It should be right in your real tax return.  You got the excess on 2 W2s but as I said Schedule SE takes the W2 wages into account and doesn't give you any Social Security tax on SE line 10 in the first place.  Here's my Single test with only 1 W2 but it should be the same with 2 W2s.  The max 168,600 for both W 2s is on line 8a.  You only pay the Medicare tax $268.

[VolvoGirl]

Yikes I just noticed that Schedule SE line 8d is not showing the W2 168,000 amount from 8a.    Then line 9 should be zero  but it is blank which is ok.  And no SS tax on line 10.  So it is calculating right.  Seems to be just a display issue.

@PatriciaV   Can you tell support about line 8d?  

[VolvoGirl]

The Schedule SE display works ok if your total W2 wages are less than the max 168,600.  Then line 8d shows the amount from 8a and line 9 has the remaining amount  subject to SS tax.  

[PatriciaV]

There’s no credit for the excess Social Security when you've already had the maximum Social Security withheld. 

However, there is a work-around using Forms Mode in TurboTax Desktop.  

1. Open your return and click the Forms icon in the TurboTax header. 
2. In the list of Forms in My Return on the left, find 1040/1040SR Wks (usually at the top) .
3. Click the form name to open it in the large window. 
4. Scroll down to Schedule 3 Part II and find the Excess Social Security and Tier I RRTA Tax Withheld Smart Worksheet.
5. Enter the total amount of your credit in the box on Line A.
6. This amount will be carried over to Form 1040 Line 32.
7. When you're finished, click Step-by-Step in the header to return to the main screens.

@Servant714 

@VolvoGirl