If your income reaches the threshold for your filing status, you may owe additional taxes.
As of January 1, 2014, you’re liable for a 0.9 percent Additional Medicare Tax on your wages, railroad retirement compensation and self-employment income — combined with your spouse’s income if filing a joint return — that exceed the threshold amount for your filing status:
|Filing Status||Threshold Amount|
|Married filing jointly||$250,000|
|Married filing separately||$125,000|
|Head of household (with qualifying person)||$200,000|
|Qualifying widow(er) with dependent child||$200,000|
You must combine wages and self-employment income to determine if your income exceeds the threshold amount based on your filing status. If it does, start planning an approach now that works best for you.
Your employer has a responsibility to withhold Additional Medicare Tax on wages it pays to you in excess of $200,000 in a calendar year, without regard to your filing status, wages paid to you by another employer, or income that you may have from other sources.
Your employer does not combine the wages for married couples to determine whether to withhold Additional Medicare Tax. If you also have self-employment income, your employer does not consider that income — or that of your spouse — in determining whether to withhold Additional Medicare Tax.
Because your employer considers only the wage it pays, you may owe more Additional Medicare Tax than your employer withholds depending on your filing status, other wages, railroad retirement (RRTA) compensation and self-employment income.
If you think you will owe more than the amount of tax withheld from your paycheck, you can make up the difference, either by making estimated tax payments or by changing the amount of your federal income tax withholding.
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For immediate assistance with the Additional Medicare Tax, or another tax matter, contact us today at 1-714-382-6780 for a FREE and CONFIDENTIAL consultation with our CPAs and former IRS Auditors.
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