H&R Block and Form 8959: The answer to a 4-year-old mystery

[cheylynn]

For the first time ever, my adult son (20 years old) is required to file. Since he's away at school, I'm doing it for him. His income: $175 in wages, $17 in interest, and a roughly $6K capital gain from stock purchased when he was an infant. (That last item is the reason he needs to file.)

In the "Data Verification" section, I got this odd warning:

You've had too much Medicare tax withheld on your W-2s due to required withholding by your employer. You might need to override values on your Form 1040 in the payment section as well as add Form 8959 to your return manually.

This warning is apparently so uncommon that that a Google search on the 5 word opening phrase, "You've had too much Medicare", yields just two hits, both of which are 4-year-old threads on this very sub! That phrase doesn't occur anywhere else on the entire Internet!

In the thread started by @thedevilaintthatbad, in a reply to a comment, the OP asks:

Why did H&R Block give me the above error?

Since I got the same error, I did some research, and I'm pretty sure I figured it out.

My son's W-2 shows $2.54 withheld for Medicare tax, and using the formula on page 8959, I used a calculator and determined that it was the right amount (within 0.25 cents).

Here's the key: Block rounds all entries to the nearest dollar. So when I typed in the $2.54 from box 6 on his W-2, it rounded that amount up to $3.

Since his only owed $2.5375, it calculated that he overpaid by $3-2.5375 = $0.4625 (forty-six and one-quarter cents).

Why it rounded up the amount paid, by not the calculated amount owed remains a mystery.

 

[lookingforhiswill]

@cheylynn If it lets you just skip that warning and efile as-is.

 

[cheylynn]

@lookingforhiswill It does, but another problem is preventing efiling. I'm on the phone with them now trying to figure out how to fix it.

 

[elministro50]

@cheylynn Electronic filing requires you to round to the nearest dollar.

 

[cheylynn]

@elministro50

Rounding to the nearest dollar is required for electronic filing

Do they allow people filling manually to round to the nearest dollar?

If not, do you know their reasoning?

Is the IRS under the impression that computers are challenged by calculations involving decimals? (And that people are better at math than computers?)

 

[elministro50]

@cheylynn They allow mail in returns to round to the nearest dollar.

Someone else (or the IRS) would need to answer the other stuff.

 

[annie11]

@cheylynn Yeah the IRS requires all numbers to be rounded to the closest dollar amount. Not sure why your software is giving you an error... sounds like a bug in the software.

Anyway, your numbers are so miniscule, there's exactly 0.00% (before rounding) chance of getting audited. So just file as is without the form 8959.