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:
- 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.
When you turn 26, you may reach the age limit of your parents' health insurance. Learn about your options for getting health insurance after 26 at H&R Block.
Be on the lookout for a New Medicare card this year. H&R Block is helping you identify what to be aware of to avoid a Medicare Card Scam.
Learn more about the HSA versus the FSA and get tax answers at H&R Block.
Afraid of owing a penalty for not having health insurance? See if you qualify for the hardship exemption with the experts at H&R Block.