Additional Medicare Tax on Wages and Self-Employment Income

For tax years beginning after 2012, a 0.9-percent additional Medicare tax applies to income over a threshold amount that an individual receives from:

The applicable thresholds for the 0.9-percent tax are:

(These thresholds are not adjusted for inflation).

Example Ben is a single filer with $185,000 in self-employment income and $40,000 in wages. Ben is liable for the 0.9-percent additional Medicare tax on $25,000 ($225,000 in earned income minus the $200,000 threshold for single filers).

Employers are required to withhold the 0.9-percent additional Medicare tax only on wages that exceed $200,000, regardless of the threshold that applies to the particular employee. This is the standard used, since employers have no way to know what your (and your spouse’s) total combined wages and self-employment income will be for the year.

Tip You may not have enough withholding to cover the additional tax. This may occur, for example, if both you and your spouse earn less than $200,000, but together you make more than $250,000. Your employers will not have withheld the 0.9 percent additional Medicare tax but you will be liable for it when you file your return because your combined earned income exceeds the applicable threshold for a joint return. Since you are liable to pay any tax that is not withheld, you should make estimated tax payments that are sufficient to pay any liability for the 0.9-percent additional Medicare tax that is not covered by withholding. Otherwise, the penalty for underpaying estimated taxes applies

You cannot designate your estimated tax payments or amounts withheld by your employers as being specifically for the 0.9-percent additional Medicare tax. All estimated tax payments and withheld amounts are applied against your entire tax liability.

The additional Medicare tax is calculated on Form 8959, Additional Medicare Tax.

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