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Additional Medicare Tax

You might have earned income for 2013 or later years that’s more than the threshold amount for your filing status. If you do, you’ll be subject to the 0.9% additional Medicare tax on earned income. The threshold amounts are based on your filing status:

  • Single, head of household, or qualifying widow(er) -- $200,000
  • Married filing jointly -- $250,000
  • Married filing separately -- $125,000

The 0.9% additional Medicare tax only applies to earned income that’s more than the threshold amount.

For purposes of the additional Medicare tax, earned income includes:

  • Wages
  • Bonuses
  • Tips
  • Certain noncash fringe benefits
  • Self-employment income

Your employer will begin withholding the additional Medicare tax once your wages reach a certain amount. Your filing status isn’t important for this. Withholding starts when your wages and other compensation are more than $200,000 for the year. This is true even if you won’t be liable for the additional Medicare tax.

Ex: You earn $225,000 and are married filing jointly. Your spouse earns $10,000. Since your joint earned income ($235,000) isn’t more than $250,000, you won’t owe the tax. However, your employer will still withhold the tax from your paycheck on wages over $200,000. Any tax withheld from your paycheck that you’re not liable for will be applied against your taxes on your income return.

In some cases, your employer might not withhold any of the additional Medicare tax. This could happen even if you’re liable for the tax.

Ex: You earn $150,000 and are married filing jointly. Your spouse also earns $150,000.  You and your spouse’s combined income ($300,000) is more than $250,000. So, you’ll be liable for the additional 0.9% Medicare tax. However, neither of your employers will withhold the tax since each of your wages is less than $200,000. So, you should make estimated tax payments and / or request additional withholding on Form W-4.

To learn more, see Additional Medicare Tax FAQS at www.irs.gov.

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