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?

[DoninGA]

@classicrockguy If the employer does not return the excess Medicare taxes withheld, then the taxpayer Can report the excess taxes withheld on Form 8959 in Part V of the form.

[classicrockguy]

My employer is required by the IRS to withhold the additional 0.9% because the income in question is part of a special compensation program for certain highly paid employees. Under normal circumstances, these are current employees who easily meet the minimums for the additional 0.9%. However, I am now retired but still receiving small annual residuals from this program for a few more years. As a retiree, I do not meet the payroll income thresholds for the additional 0.9%. I guess I am stuck with this “error” for a few more years. 

So, 1) the company is not going to refund the excess to me directly and 2) advise I (and many others affected in this way) simply use Form 8959 to recover the excess per IRS rules. This has been the approach now for several years. 

This brings me back to my original post (and other users posts) that TurboTax needs to fix this problem with how they are handling Form 8959. I should not be forced to choose between filing a paper return as a “workaround”, or paying a few hundred dollars in un-owed Medicare taxes for the privilege of e-filing the return with TurboTax. 

[DoninGA]

@classicrockguy The IRS Form 8959 is available for e-filing when using TurboTax.

[classicrockguy]

Nope. Not when you don’t meet the specified income levels. It is excluded from the collection of forms associated with the return. That’s the whole problem.

The overwithheld Medicare tax is correctly computed in Section V of Form 8959. But, if you don’t meet the income levels for MANDATORY filing of the form, TurboTax does not carry the overwithheld Medicare amount forward to the taxes paid summary and does not include Form 8959 in the electronic return collection of forms. This plus any override to correct the carry- forward problem prohibits electronic filing of the return. 

As I and others continue to point out, this prohibits filers in the unique situation of having overwithheld Medicare tax without meeting the income thresholds from e-filing with TurboTax. The only option is to override Line 16f on the taxes paid summary and manually print and file everything including Form 8959 (which can be called up separately from the Forms menu with all of the correct entries, oddly enough). 

[classicrockguy]

Sorry. I meant to reference Line 18f on the taxes paid summary. 

[DoninGA]

@classicrockguy I seem to recall this same issue from either 2018 or 2017.  Did some checking in Forms mode.  And although the program does calculate the correct overpayment on the Form 8959 and enter the amount on Line 24, that amount does not flow to the Tax Payment Worksheet Line 18f, just as you stated.  

I will report this to the TurboTax Moderators of the forum and see if this can be corrected.  But since it has been this way in the past with no correction, I am not hopeful, but who knows.

Anyway, Thanks for pointing this out.  

[Robert77]

DoninGA, I too would be very appreciative if you can report this issue as request it be corrected.  I posted on this several times last year, and never felt the message really got through.  ClassicRockGuy has done a better job of explaining the issue, so maybe it can be corrected.  Having to print and mail as a workaround should be a significant embarrassment to TurboTax, hopefully they will be motivated to get this right.

[DoninGA]

@Robert77 @classicrockguy I have reported this issue with the Form 8959 to the TurboTax Moderators of this forum.  Whether or not this will be corrected this tax year is not yet known until Product Quality and Product Development takes a look.  If I hear back anything one way or the other, I'll report it on this thread.  Just do not expect anything soon.

[follette]

I agree that this is an issue and that TT doesn't handle it properly when your income is below the threshold.

For what it's worth, I was able to convince my employer to refund the additional tax directly to me, and correct my W-2.  Saved me having to file the form and get it back from the IRS.  Good luck everyone!

[classicrockguy]

Still no resolution to this problem as of today. As a longtime user of TT who has never had a single issue, this is very disappointing. I have resolved to override values and file manually, but that is not acceptable to me from a product standpoint. 

To rub salt into the wound, I recently convinced a friend to start using TT for his 2019 return, and he is having major issues with the software refusing to transfer basic W-2 information to the UT state return. I have spent hours trying to help, including starting a new return from scratch. No resolution. This is very basic stuff that is not working. He has to do the UT state return manually now. Ridiculous. 

[AmyC]

I have seen the excess Social Security carrying on several returns that I saw. I wonder if it could be your program. We have discovered Internet Explorer is  a problem. For the desktop, we did discover a loop which has now been fixed. I am sorry for your frustration.

[classicrockguy]

It is not excess SS. It is excess Medicare. As I have documented throughout these postings, both the IRS and my previous employer’s tax attorney have advised Form 8959 is the proper way to recover excess Medicare withheld regardless of income. TurboTax calculates the credit correctly on Form 8959, but then refuses to transfer the credit forward when income is below certain thresholds. This is simply incorrect.

[Robert77]

Any chance this has, or will be, fixed soon?  I keep hoping to see the correction in an update, but so far have not.

[Robert77]

DoninGA, just wondering if there is any feedback on this and any hope at all that this gets fixed.  Seems like it would be a relatively easy update to make, and would enable those of us in this situation to e-file.

[DoninGA]

---

@Robert77 wrote:

DoninGA, just wondering if there is any feedback on this and any hope at all that this gets fixed.  Seems like it would be a relatively easy update to make, and would enable those of us in this situation to e-file.

---

This is the last information received from a TurboTax Moderator concerning this issue -

"The suggestion is to add a screen that will guide users (similar to the excess Social Security screen) who have excess Medicare Taxes and do not meet that threshold.

It has been added to a "master" list of related W-2 enhancements, which are being actively worked, so there is certainly an intent to work on this, but at this point, I can't give you any kind of timeline."