Additional Medicare Tax on Wages
and Self-Employment Income
For tax years
beginning after 2012, a 0.9-percent additional Medicare tax applies
to income over a threshold amount that an individual receives from:
self-employment
income,wages, andRailroad Retirement Tax Act (RRTA)
compensation paid to railroad employees. The applicable
thresholds for the 0.9-percent tax are:
$250,000, for joint returns;$125,000,
for married taxpayers filing separately; and$200,000, for
all other returns.(These thresholds are not adjusted for
inflation).
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Example Ben is a single filer with $185,000
in self-employment income and $40,000 in wages. Ben is liable for
the 0.9-percent additional Medicare tax on $25,000 ($225,000 in earned
income minus the $200,000 threshold for single filers). |
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Employers are required to withhold the 0.9-percent additional
Medicare tax only on wages that exceed $200,000, regardless of the
threshold that applies to the particular employee. This is the standard
used, since employers have no way to know what your (and your spouse’s)
total combined wages and self-employment income will be for the year.
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Tip You may not have enough withholding to cover
the additional tax. This may occur, for example, if both you and your
spouse earn less than $200,000, but together you make more than $250,000.
Your employers will not have withheld the 0.9 percent additional Medicare
tax but you will be liable for it when you file your return because
your combined earned income exceeds the applicable threshold for a
joint return. Since you are liable to pay any tax that is not
withheld, you should make estimated tax payments that are sufficient
to pay any liability for the 0.9-percent additional Medicare tax that
is not covered by withholding. Otherwise, the penalty for underpaying
estimated taxes applies |
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You cannot designate your estimated tax payments or amounts
withheld by your employers as being specifically for the 0.9-percent
additional Medicare tax. All estimated tax payments and withheld amounts
are applied against your entire tax liability.
The additional
Medicare tax is calculated on Form 8959, Additional Medicare Tax.
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