Is there an issue with form 8959 not computing medicare tax correctly?

[tony-alfaia]

Why does it not subtract the excess withheld from the calculated .9% tax on excess earnings?

[DavidD66]

No, there is no issue with Form 8959.  The way the amounts calculated on the form can be a bit confusing.  The additional Medicare tax is calculated in Parts I, II, and III and the totaled in Part IV.  The amount in Part IV, line 18 is reported as an additional tax on line 11 of Schedule 2 (Form 1040) line 11.  Part V of 8949 is the withholding reconciliation.  If the amount withheld in Box 6 of your W-2 includes the 0.9% additional Medicare Tax on a portion of your earnings, then that amount appears on line 25c of Form 1040:  "Federal income tax withheld from: Other forms".  

So the 0.9% withheld is not subtracted from in the calculation of additional Medicare Tax, but it is included as a tax withholding, and the end result is the same.