Due to the passing of Obamacare, a new Additional Medicare Tax goes into effect starting in 2013. The Additional Medicare Tax applies to an individual’s wages, Railroad Retirement Tax Act compensation, and self-employment income that exceeds a threshold amount based on the individual’s filing status.
- When does Additional Medicare Tax start?
Additional Medicare Tax applies to wages and compensation above a threshold amount received after December 31, 2012 and to self-employment income above a threshold amount received in taxable years beginning after December 31, 2012. - What is the rate of Additional Medicare Tax?
The rate is 0.9 percent. - 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 (together with that of his or her spouse if filing a joint return) exceed the threshold amount for the individual’s filing status:
The threshold amounts are:
- $250,000 for married taxpayers who file jointly,
- $125,000 for married taxpayers who file separately, and
- $200,000 fo all other taxpayers
An employer is responsible for withholding the Additional Medicare Tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year. The IRS and the Treasury Department have issued proposed regulations on the Additional Medicare Tax. Comments may be submitted electronically, by mail or hand delivered to the IRS. To read the information on the proposed regulations, see http://www.gpo.gov/fdsys/pkg/FR-2012-12-05/pd./2012-29237.pdf. Additional answers to questions on this topic can be found at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Questions-and-Answers-for-the-Additional-Medicare-Tax.
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