Some of our employees are asking us about the Additional Medicare Tax and when we will start withholding it. What is the Additional Medicare Tax?
Answer: The Additional Medicare Tax was enacted as part of the Patient Protection and Affordable Care Act. The Additional Medicare Tax is effective for tax years beginning after December 31, 2012. The rate of the Additional Medicare Tax is 0.9% on wages subject to Medicare Tax that are in excess of an individual’s threshold based on the individual’s filing status for federal income taxes.
Railroad Retirement Tax Act (RRTA) Compensation Is Subject To Additional Medicare Tax
All RRTA compensation that is in excess of the applicable threshold for an individual’s filing status is subject to additional Medicare Tax if it is subject to Medicare Tax.
Individuals Liable for Additional Medicare Tax at Certain Thresholds
If an individual (or individual and spouse, if filing jointly) have qualified income in excess of the threshold for that individual’s filing status, the individual is labile for Additional Medicare Tax. Qualified income is wages, other compensation, and self-employment income.
Thresholds for Different Filing Statuses in 2013
The thresholds in 2013 are as follows:
|Married Filing Separately||$125,000|
|Head of Household with Qualifying Person||$200,000|
|Qualifying Widow or Widower with Dependent Child||$200,000|
|Married Filing Jointly||$250,000|
More Information on the Additional Medicare Tax Will Be Forthcoming
Over the next few weeks, Vision Payroll will be providing more information on the Additional Medicare Tax. Be sure to check back regularly for further updates.