I looked at saw in the forms that Schedule 4 was included, and it showed an X next to Form 8959 and 8960. I checked into Form 8959 a bit more and noticed that it was adding additional withholding for medicare. I've done the medicare calculation by hand and that is the exact amount already listed on my W2 based on the level threshold level.
Will this error be corrected? It is currently creating an additional amount often due when in actuality my company over withheld by a touch (they didn't realize the correct threshold since I file jointly as opposed to just head of household).
I've currently overridden the issue, but I'd like this error to be corrected in an update as others might not look at the forms and see this.
It is not an error. The excess Medicare withholding is handled in an odd way. While Form 8959 is used to calculate the amount of excess Medicare tax you owe, the amount that was withheld through payroll is included in federal withholding and reported as such. The two net out.
I had the same problem and the form shows I owe an additional $275. Could you give me the form to perform the calculations myself?
I think I figured it out. Turbo Tax is not wrong. On form 8959, Line 18 is added to Schedule 4 line 62, then carried to 1040 line 14; on the other hand, form 8959 line 24 is added to 1040 line 16! So they are cancelled out!
It is not an error. The excess Medicare withholding is handled in an odd way. While Form 8959 is used to calculate the amount of excess Medicare tax you owe, the amount that was withheld through payroll is included in federal withholding and reported as such. The two net out.
But then this should not flow into Line 14 on the 1040 - it is adding additional tax to my total.
Agree, do not understand because looking at the 8959 form, line 19 says it represents W2 box 6 but it does not. It is combining medicare and SS tax.
The Turbotax calculation is correct. The additional withholding (line 24 on Form 8959) is added to line 16 on 1040 (although the form doesn't state so). Check and you will see that this amount this additional amount corresponds to the additional tax on line 14 (for the additional Medicare tax). So the additional taxes (line 14) is offset by the withholding increase in line 16.
On a net basis, Turbotax seems to be getting to the right place but it is making things overly confusing this way.
It added $35k to me "owed taxes"!!! I shouldn't owe any! Now what?
8959 computes the additional medicare tax on wages over the threshold. this gets added to your tax liability
to your regular federal withholding, if your employer withheld more than 1.45% on your medicare wages that gets added to your federal withholding
say lines 1 and 4 of 8959 are $350,000
line 6 would be $100,000 for line 6 MFJ
and line 9 would be $900
$350,000 in medicare wages should normally have tax withheld @ 1.45% or $5,075 in this case if more than that was withheld that extra would be added to your federal withholding. part V of form 8959
that's the law. an extra .9% tax on medicare wages in excess of the threshold
in addition to an additional 3,8% tax for excess investment income.
I don't think I have seen it mentioned here, but I now see that things look correct. TurboTax calculates what it thinks is the additional Medicare tax for any earnings over 200,000, based on filing status, and ends up including that in 1040, line 23, even if something has already been withheld. So, it gets included in total tax due. However, 1040 line 25c then reflects what has already been withheld for earnings over 200,000, which is then included in 1040, Line 25d. So, then only the difference between what one owes for earnings over 200,000 and what one has already paid for earnings over 200,000 is being reflected as a tax. So, there is no issue.