ProSeries will automatically calculate the Schedule 3 line 10 if the tax return contains excess social security or tier 1 RRTA tax withheld. There are two common scenarios that trigger this calcualtion:
Scenario 1: Multiple W-2's during the year
If the taxpayer or spouse had more than one employer during the tax year and the total Social Security tax or Railroad Retirement Tax Act (RRTA) tier 1 tax withheld was over the limit for that tax year, the program automatically calculates the amount of excess social security tax or RRTA tier 1 tax withheld.
Scenario 2: Spouses' W-2 isn't marked correctly
This issue can also happen if the spouse W-2 doesn't have the Spouse's W-2 box checked. Review the W-2 worksheets to make sure they're entered correctly and remove any W-2 worksheets that are no longer needed.
Overpayment of Social Security and Medicare withholding
The employer withheld twice the amount of Social Security (FICA) and Medicare. However, the difference doesn't show up on the return as a credit.
Why is this happening?
According to IRS Pub. 505 and the IRS instructions for Form 1040, if a taxpayer has more than one employer and has wages greater than the threshold, then a credit can be claimed on the 1040 return. In all other scenarios, the taxpayer will need to seek a refund from the employer. If the employer refuses, the employee may file a claim for refund using Form 843.
The Social Security (FICA) withholding limits, rates, and wage thresholds change yearly.
