The IRS has released Questions and Answers relating to the Additional Medicare Tax for high earners which goes into effect in 2013 as part of Health Care Reform. Below are five things employers should know about the tax.
- The Additional Medicare Tax rate is 0.9% for taxable years beginning after December 31, 2012.
- The additional tax applies to an individual’s wages, other compensation, and self-employment income (together with that of his or her spouse if filing a joint return) over certain thresholds.
- Employers are responsible for withholding the Additional Medicare Tax on wages or compensation they pay to an employee in excess of $200,000 in a calendar year.
- An employer has this withholding obligation even though an employee may not be liable for the Additional Medicare Tax because, for example, the employee’s wages or other compensation together with that of his or her spouse (when filing a joint return) does not exceed the $250,000 liability threshold for married filing jointly.
- There is no requirement that an employer notify its employees when it begins withholding the additional tax, and there is no employer match for the Additional Medicare Tax as there is with the regular Medicare tax.
For More Information
You may review the Questions and Answers in their entirety on the IRS website.