When was the additional Medicare tax added to the IRS?
In late November 2013, the Internal Revenue Service issued final regulations relating to the Additional Medicare Tax on income above threshold amounts, as added by the Affordable Care Act. The IRS also issued updated Questions and Answers for the Additional Medicare Tax.
When do employers have to begin withholding additional Medicare tax?
Employers are required to begin withholding Additional Medicare Tax in the pay period in which the employer pays wages in excess of $200,000 to an employee.
Do employers have to contribute to the additional Medicare tax?
Employers do not have to contribute any amounts through the additional Medicare tax. A person is liable for the additional Medicare tax after their total income goes above the threshold for their filing status. The 2020 tax year thresholds are as follows:
Who pays the additional Medicare tax?
The Additional Medicare Tax is owed by higher-income employees, and employers are responsible for withholding this tax and paying it to the Internal Revenue Service (IRS). Learn how to withhold, report, and pay this employment tax.
Does the employer have to pay the additional Medicare tax?
Employer Responsibilities An employer must begin withholding Additional Medicare Tax in the pay period in which the wages or railroad retirement (RRTA) compensation paid to an employee for the year exceeds $200,000. The employer then continues to withhold it each pay period until the end of the calendar year.
When did Form 8959 start?
2013Starting with the 2013 tax year, you may be subject to an additional 0.9 percent Medicare tax on wages that exceed a certain threshold.
Is there additional Medicare tax in 2021?
The Additional Medicare Tax applies to people who are at predetermined income levels. For the 2021 tax year, those levels are: Single tax filers: $200,000 and above. Married tax filers filing jointly: $250,000 and above.
What is the additional Medicare tax for 2022?
0.9%2022 updates 2.35% Medicare tax (regular 1.45% Medicare tax plus 0.9% additional Medicare tax) on all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return).
Why do I have additional Medicare tax form 8959?
Purpose of Form Use Form 8959 to figure the amount of Additional Medicare Tax you owe and the amount of Additional Medicare Tax withheld by your employer, if any. You will carry the amounts to one of the following returns. Form 1040.
What is the additional Medicare tax form 8959?
The Additional Medicare Tax is an additional (0.9%) tax to wages, compensation, and self-employment income, if an individual's income exceeds the threshold amount for their individual filing status.
What is the 3.8 Medicare surtax?
The Medicare tax is a 3.8% tax, but it is imposed only on a portion of a taxpayer's income. The tax is paid on the lesser of (1) the taxpayer's net investment income, or (2) the amount the taxpayer's AGI exceeds the applicable AGI threshold ($200,000 or $250,000).
Are payroll taxes changing in 2021?
The payroll tax rate that goes toward Social Security is currently set at 6.2%, and will stay the same in 2021. In 2021, employees' wages only up to $142,800 are subject to Social Security.
How do I avoid Medicare surtax?
Despite the complexity of this 3.8% surtax, there are two basic ways to “burp” income to reduce or avoid this tax: 1) reduce income (MAGI) below the threshold, or 2) reduce the amount of NII that is subject to the tax.
Did payroll taxes change in 2022?
For the employee payroll tax (6.2 percent) and for benefit credit purposes, beginning in 2022, increase the taxable maximum by an additional 2 percent per year until taxable earnings equal 90 percent of covered earnings.
What is the Medicare surcharge for 2021?
Higher-income Medicare beneficiaries will pay more. In 2021, individuals with modified adjusted gross income of $88,000 or more and married couples with MAGIs of $176,000 or more will pay additional surcharges ranging from $59.40 per month to $356.40 per month on top of the standard Part B premium.