Retirement tax questions
Your total medicare tax withholding on Form 8959 will be used to offset your total tax liability on Form 1040 24 since your total Tax Payments which include additional medicare tax on line 25c of Form 1040 are factored in when computing your remaining tax liability or refund.
Since Form 1040 has changed, it might be confusing to see where the amounts on Form 8959 flow to on your Form 1040.
Please review the below:
- The amounts on Form 8959 line 24 (screenshot below), will flow to Form 1040 line 25c (Other Forms) which is within the Tax Payments section.
- Line 7, Part 1, of Form 8959 shows the additional medicare tax on medicare wages which is multiplied by .9%.
- The sum of Part 1, Part 11, and Part 111 is totaled on line 18 (total additional medicare tax). This total flows to Schedule 2 (Additional Taxes)
- This total of all additional taxes on Schedule 2 will flow to Line 23, Other Taxes, and will increase your total tax liability on line 24 of Form 1040.
Working through Form 8959
Form 8959 consists of three parts. Each part includes a short calculation to figure out how much Additional Medicare Tax you owe if any. You complete only the part of the form that applies to the type of income you received. Fill out:
- Part I if you received W-2 income
- Part II if you received self-employment income
- Part III if you received RRTA
If you had more than one type of income, such as W-2 income and self-employment income, you will have to complete all sections that apply. Once you complete Form 8959 and figure out the total Additional Medicare Tax you're responsible for, the final section of the form subtracts the tax you paid through paycheck withholding as shown on your W-2. The result shows if there is any Additional Medicare Tax due—which ultimately gets reported on your 1040 form.
Review the screenshot below:
Review the information in the link below as well:
