I have found what appears to be a major error in ProSeries regarding Form 8959 Additional Medicare Tax.

When a married couple does NOT owe additional Medicare Tax because their Medicare wages are below $250,000 but they have had excess Medicare taxes withheld ProSeries does not transfer the excess to Line 18d of the Tax Payments Worksheet and, therefore, to Line 16 of Form 1040.

They are not getting credit for the total amount of taxes paid. Form 8959 is in fact not even included in the forms filed with the IRS

How I found this out was a notice sent to my client stating they had a refund due.

Facts:

W-2 Medicare Wages were $86,099

Medicare tax withheld (per W-2) were $1,929

Correct Medicare tax on $86,099 is $1,248

Client was informed by IRS that they are due a refund of $681.

When I looked at this return in ProSeries the Form 8959 DOES NOT show up under Forms In Use. So, I looked at the Form 8959. In Part I it correctly shows the $86,099 as Medicare Wages and correctly computes the Additional Medicare Tax due as $0 on line 7.

In Part V, Withholding Reconciliation, it correctly shows the $1,929 of Medicare Taxes actually withheld on Line 19.

It then correctly computes the regular Medicare Tax withholding on the $86,099 in Medicare Wages as $1,248 and puts this amount on Line 21.

Line 24 then shows the Total Additional Medicare Tax withholding of $681 that is supposed to be included with federal income tax withholding on Form 1040, Line 16.

ProSeries does NOT transfer this amount.

I have also found that this issue is exactly the same in the 2017 ProSeries software.

I will be calling Support on this issue on Monday.

I would also advise you preparers to check and see if any of your clients were impacted by this.