Now that the first filing season is behind us (though extensions are still a factor) with the additional Medicare tax on earnings, here are six things that you should know about this additional tax.
1. The Additional Medicare Tax is 0.9 percent. It applies to the amount of your wages and/or self-employment income that is more than a threshold amount. The threshold amount that applies to you is based on your filing status. If you’re married and file a joint return, you must combine your spouse’s wages, compensation, or self-employment income with yours to determine if you exceed the “married filing jointly” threshold.
2. The threshold amounts are:
3. You must combine wages and self-employment income to determine if your income exceeds the threshold. You do not consider a loss from self-employment when you figure this tax.
4. Employers must withhold this tax from your wages or compensation when they pay you more than $200,000 in a calendar year, without regard to your filing status, wages paid to you by another employer, or income that you may have from other sources. Your employer does not combine the wages for married couples to determine whether to withhold Additional Medicare Tax.
5. You may owe more tax than the amount withheld, depending on your filing status and other income.
6. If you owe this tax, file Form 8959, with your tax return. You also report any Additional Medicare Tax withheld by your employer on Form 8959.
You cannot request that your employer start withholding this tax. If you want to make certain that you do not have a tax bill, you may want to consider estimated tax payments.
By Donna H. Laubscher, CPA
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