Additional Medicare Tax and what it means for you

When you file your 2013 taxes in April, you’re in for a surprise bill or refund due to the effects of the Additional Medicare Tax, which is levied on top of the Medicare tax you already pay. The Additional Medicare Tax applies to individuals’ wages, other compensation, and self-employment income over $250,000. Once you earn over $200,000, you’ll see the withholding for the 0.9% surtax on your paystub. Employers are obligated to collect the tax–without regard to the employee’s filing status or outside compensation.

BASIC FAQs

  1. When does Additional Medicare Tax start? Additional Medicare Tax applies to wages and compensation above $250,000 received after January 1, 2013. You will see the effects of the Additional Medicare Tax on your taxes in April.
  2. What is the rate of Additional Medicare Tax? The rate is 0.9 percent in addition to the 1.45 percent that you already pay.
  3. When are individuals liable for Additional Medicare Tax? An individual is liable for Additional Medicare Tax if the individual’s wages, compensation, or self-employment income exceed the threshold amount for the individual’s filing status:

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

  1. What wages are subject to Additional Medicare Tax? ?All wages that are currently subject to Medicare Tax are subject to Additional Medicare Tax if they are paid in excess of the applicable threshold for an individual’s filing status. For more information on what wages are subject to Medicare Tax, see the chart, “Special Rules for Various Types of Services and Payments”, in section 15 of Publication 15, (Circular E), Employer’s Tax Guide.

For more information visit www.irs.gov.