Additional Medicare Tax

By | April 13, 2014

A new Medicare tax fees came into force on January 1, 2013. Additional Tax Medicare 0.9 percent applies to wages of individuals, compensation Tax Act Railroad Retirement, and earnings from self-employment that exceed a limit amount based on marital status for purposes of the statement of the person. The thresholds are $ 250,000 for married taxpayers filing jointly, $ 125,000 for married taxpayers filing separately, and $ 200,000 for all other taxpayers. 


Additional Medicare Tax Thresholds

An individual is liable for Additional Medicare Tax if the individual’s wages, compensation, or self-employment income (together with that of his or her spouse if filing a joint return) exceed the threshold amount for the individual’s filing status:

Filing Status

Threshold Amount

Married filing jointly $250,000
Married filing separate $125,000
Single $200,000
Head of household (with qualifying person) $200,000
Qualifying widow(er) with dependent child $200,000



Paying Additional Medicare Tax

An employer is responsible for withholding the Additional Medicare tax salary or compensation paid to an employee in excess of $ 200,000 in a calendar year. The November 26, 2013, the IRS and the Treasury Department issued final regulations which provide guidelines for employers and individuals in relation to the implementation of the additional Medicare tax, the requirement to report the additional Medicare tax, and the process for setting and underpayments in excess of the additional Medicare tax by employers. 


Additional Medicare Tax on wages, compensation and self-employment income

An individual will owe Additional Medicare Tax on wages, compensation and self-employment income (and that of the individual’s spouse if married filing jointly) that exceed the applicable threshold for the individual’s filing status. Medicare wages and self-employment income are combined to determine if income exceeds the threshold. A self-employment loss is not considered for purposes of this tax. RRTA compensation is separately compared to the threshold.

In addition, the regulations provide guidance on the process for employers and individuals submit a claim for a refund for overpayment of Medicare surtax.


Additional Medicare Tax and Form 8959

Individuals will calculate Additional Medicare Tax liability on their individual income tax returns (Form 1040),using Form 8959, Additional Medicare Tax. Individuals will also report Additional Medicare Tax withheld by their employers on their individual income tax returns. Any Additional Medicare Tax withheld by an employer will be applied against all taxes shown on an individual’s income tax return, including any Additional Medicare Tax liability.