We had too much Medicare tax withheld and TT calculates it correctly on Line 24 of Form 8959 but it doesn't pass through to Line 16 of my 1040. Why not?

[follette]

I had the additional 0.9% Medicare tax withheld on one of my W-2's, but our income does not exceed the limits, so we have overpaid Medicare tax for this year.  In TurboTax 2018 Premier, I can see our overpayment, correctly calculated, on Line 24 of Form 8959.  However, it does not end up being included in Line 16 of my 1040 (federal income tax withheld).  Why isn't that amount passing through to the 1040?

[follette · Accepted solution]

After hours on the phone with TurboTax, we found the answer.  If your income is less than the threshold, the IRS does not want you to use Form 8959 to get excess Medicare withholding back.  They instruct you to work it out with your employer, or file a claim with them.  See this answer for details: https://ttlc.intuit.com/questions/4677534-can-i-get-a-refund-for-excess-medicare-tax-withheld

[Robert77]

I believe this is incorrect. See following quote from irs.gov regarding use of 8959 when there is excess Medicare withholding:

29. My wages and self-employment income or my RRTA compensation do NOT exceed the threshold for my filing status, but my employer withheld 0.9 percent from my wages; do I need to file Form 8959?
Yes. If your employer withheld the 0.9% Additional Medicare Tax from your wages or compensation, and you will not meet the threshold based on your filing status, then the amount that was withheld from your wages or compensation may be refundable to you. Therefore, you need to file Form 8959, Additional Medicare Tax, to document the withholding and to receive a refund of any tax that was withheld in excess of the total tax owed on your individual income tax return.

The above seems to demonstrate that TurboTax is incorrect on this point and needs to be corrected.

[Robert77]

I spoke with turbotax phone support, Level 1 support referred me on to next level, which may have been CPA but he did not confirm with me.  He tried to be helpful, agreed that I should file Form 8959 but stated that turbotax would not include Form 8959 with my electronic return.  In other words, the answer I got confirmed that turbotax does not treat this situation correctly, and if I file electronically I will pay more tax than I owe.  The only solution offered was to override Line 16 on 1040 by manually adding the amount on Line 24 from Form 8959, then printing off the return and mailing.  In essence, turbotax does not handle this situation correctly and I am on my own.  I guess after several years with turbotax I can go back to Taxcut next year and see if it can do this correctly.  Needless to say, I am not impressed.

[CherylW]

It actually goes on line 72 of Schedule 5, which carries over to line 17 of Form 1040.

To see your 1040:

1.       Go to Tax Tools on the left-hand side.

2.       Go to Tools.

3.       Go to View Tax Summary.

4.       Click Preview my 1040 from the left-hand side.

[follette]

When I look at Line 72 of Schedule 5, there's no entry.  I think that may be correct, since this is not a an excess social security or RRTA.

Line 24 of Form 8959 has a positive number, which I assume means that I have overpaid and will receive a credit.  I still can't figure out where this credit should go, or why it isn't affecting my federal refund amount.

The other reason that suggests that the amount is not passing through is if I manually adjust my W-2 to have even greater (erroneous) Medicare withholding, there is no change to my estimated Federal Refund.  

[Robert77]

I am convinced this is a bug in TurboTax, but so far I have been unable to get them to correct.  I have the same situation, this positive number from Line 24 of 8959 should carry to Line 18f of the Tax Payments Worksheet, which then feeds in to Line 16 of Form 1040.  Interestingly when I put cursor on my (blank) Line 18f and click the little spyglass to Go To Supporting Form, it goes correctly to my Form 8959 and shows the positive number.  But that number won't transfer and TT will not let me include Form 8959.  (Corrected typo, 18f is the correct line number)

[CherylW]

and there isn't an entry on line 18f of your Tax Payments worksheet?  I recreated a return and my excess shows on line 18f.

[Robert77]

No, line 18f remains blank on the TP worksheet, and Form 8959 is not included in the return.  If I fudge my W2 information such that I exceed the income threshold, Form 8959 then appears included in my return and all seems to work correctly.  I would love to submit electronically, and I could override 18f on the TP worksheet and/or Line 16 on the 1040, but I would still have to get TurboTax to include Form 8959.  Any help would be greatly appreciated.

[Robert77]

I spoke with turbotax phone support, Level 1 support referred me on to next level, which may have been CPA but he did not confirm with me.  He tried to be helpful, agreed that I should file Form 8959 but stated that turbotax would not include Form 8959 with my electronic return.  In other words, the answer I got confirmed that turbotax does not treat this situation correctly, and if I file electronically I will pay more tax than I owe.  The only solution offered was to override Line 16 on 1040 by manually adding the amount on Line 24 from Form 8959, then printing off the return and mailing.  In essence, turbotax does not handle this situation correctly and I am on my own.  I guess after several years with turbotax I can go back to Taxcut next year and see if it can do this correctly.  Needless to say, I am not impressed.

[classicrockguy]

I have run in to the same issue now with the preliminary tax year 2019 version of TurboTax Premier. I spoke with both the tax attorneys at my employer (major corporation), as well as called the IRS directly to talk with their "experts". Both confirm that IRS Form 8959 must be used to reconcile any over withheld Medicare taxes REGARDLESS OF INCOME LEVEL. If IRS Form 8959 Part V Line 24 reflects a value >0 (over withheld Medicare tax), it must flow to the TurboTax Tax Payment Summary form Line 18f, which in turn then flows to the IRS 1040 Form Line 17 as part of total taxes paid. In effect, the over withheld Medicare is credited as part of total taxes paid for the year. Further, IRS Form 8959 must be submitted to the IRS along with the rest of the tax return IF there is any credit in Part V, REGARDLESS OF INCOME LEVEL, which TurboTax does not do.

As mentioned in a another post, the only current workaround with TurboTax software is to override the value on the TurboTax Tax Payment Summary Line 18f, print all of the forms (including IRS Form 8959), and file the return manually. The IRS also advised that the return could be filed electronically without IRS Form 8959 in order to expedite any tax refund, but the taxpayer would have to then file a paper amended return later that includes IRS Form 8959. (This seems a bit messy to me.)

The BEST solution would be for the TurboTax folks to stop claiming the IRS is advising them otherwise, and fix this error! 

[classicrockguy]

This is not the “Best Answer”. The “experts” at TurboTax are wrong. The IRS confirmed to me that using Form 8959 IS the correct way to recover overwithheld Medicare taxes, regardless of reported income. Read the instructions from the IRS as printed on the form itself.

So far I have not gotten any response from TurboTax support on this issue. Please  correct this bug so I can efile for 2019 taxes!

[Robert77]

Time for someone at TurboTax to get this simple bug fixed.  Will someone who actually works for TurboTax and has authority to make decisions please post a timeline for getting this fixed?  It’s been almost a year since I raised this to your attention.

[DoninGA]

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@classicrockguy wrote:

This is not the “Best Answer”. The “experts” at TurboTax are wrong. The IRS confirmed to me that using Form 8959 IS the correct way to recover overwithheld Medicare taxes, regardless of reported income. Read the instructions from the IRS as printed on the form itself.

So far I have not gotten any response from TurboTax support on this issue. Please  correct this bug so I can efile for 2019 taxes!

---

Nope.  If the employer made a mistake and withheld to much Medicare taxes as reported on the W-2 then the employer is required to refund the difference.

Form 8959, Additional Medicare Tax, is only used if - https://www.irs.gov/pub/irs-pdf/i8959.pdf

You must file Form 8959 if one or more of the following applies to you.
• Your Medicare wages and tips on any single Form W-2 (box 5) are greater than $200,000.
• Your railroad retirement (RRTA) compensation on any single Form W-2 (box 14) is greater than $200,000.
• Your total Medicare wages and tips plus your self-employment income, if any (including the Medicare wages and tips and self-employment income of your spouse, if married filing jointly), are greater than the
threshold amount for your filing status in the chart on this page.
• Your total railroad retirement (RRTA) compensation and tips (Form W-2, box 14) (including the railroad retirement (RRTA) compensation and tips of your spouse, if married filing jointly) is greater than the threshold amount for your filing status in the chart on this page.

Your Medicare wages include your wages and tips from Form W-2, box 5; your tips from Form 4137, line 6; and your wages from Form 8919, line 6.

[classicrockguy]

Well, I spent quite a while on the phone with the IRS and they were very clear:

The only way to document and get credit for an overwithheld Medicare tax situation was to file Form 8959. This applies regardless of income. I also asked about getting the refund from the employer, and they advised that employers were not even allowed to do this.

The instructions state this form is required if you make more than the stated amounts. However, it does not state that it is not required for earning less than that amount. It also does not state anything about recovering overages from the employer. Further, I am unable to find any documentation on IRS.govsupporting the position that the IRS requires you to work with your employer for the refund. To the contrary and per the instructions on Form 8959:

“You can't ask your employer to stop Additional Medicare Tax withholding if it is required to withhold it. If you don't owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959.”

All of this is also confirmed by my employer’s tax attorney. 

So bottom line for me is simple: 

The IRS phone support people, the Form 8959 instructions, and my (major corporation) tax attorneys are all quite clear on this topic. 

BUT, if you have current evidence this is all wrong, I would like to know who in the IRS I cam contact to refute.

I know tax code and rules are “too complex for us mere mortals”, but my research all disagrees with the TurboTax handling of this issue.