The IRS has issued final regulations relating to the Additional Medicare Tax on income above threshold amounts, as added by the Affordable Care Act.
Employers are responsible for withholding and reporting the 0.9% Additional Medicare Tax, which became effective in 2013. If an employer fails to withhold the correct amount from wages it pays to an employee, the employer may be liable for the amount not withheld and subject to applicable penalties.
In general, employees and their employers must each pay a Medicare tax, at a rate of 1.45%, on the entire amount of the employees’ wages. Effective for employees beginning in 2013, the 0.9% Additional Medicare Tax is imposed on individuals for wages in excess of $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately and $200,000 for single taxpayers. Thus, for high-wage earners, the employer portion of the Medicare tax remains at 1.45%, but the employee portion can be a total of 2.35% of wages in excess of the threshold amounts.
To comply with the Additional Medicare Tax requirement, employers must withhold the 0.9% Additional Medicare Tax from wages it pays to an employee in excess of $200,000 in a calendar year, without regard to the employee’s filing status, wages paid by another employer or income from self-employment. Thus, generally the employer need not obtain additional information from the employee regarding the employee’s expected actual liability to withhold amounts due under the Additional Medicare Tax.
Employers are responsible for withholding and reporting the 0.9% Additional Medicare Tax, which became effective in 2013. If an employer fails to withhold the correct amount from wages it pays to an employee, the employer may be liable for the amount not withheld and subject to applicable penalties.
In general, employees and their employers must each pay a Medicare tax, at a rate of 1.45%, on the entire amount of the employees’ wages. Effective for employees beginning in 2013, the 0.9% Additional Medicare Tax is imposed on individuals for wages in excess of $250,000 for married taxpayers filing jointly, $125,000 for married taxpayers filing separately and $200,000 for single taxpayers. Thus, for high-wage earners, the employer portion of the Medicare tax remains at 1.45%, but the employee portion can be a total of 2.35% of wages in excess of the threshold amounts.
To comply with the Additional Medicare Tax requirement, employers must withhold the 0.9% Additional Medicare Tax from wages it pays to an employee in excess of $200,000 in a calendar year, without regard to the employee’s filing status, wages paid by another employer or income from self-employment. Thus, generally the employer need not obtain additional information from the employee regarding the employee’s expected actual liability to withhold amounts due under the Additional Medicare Tax.
