General Instructions

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.

  • Form 1040NR.

  • Form 1040-SS.

  • Form 1040-PR.

 
 
Attach Form 8959 to your return.

If you are filing Form 8959, you must file one of the forms listed above. Do not attach Form 8959 to Form 1040A, 1040EZ, or 1040NR-EZ.

Additional Medicare Tax.   For tax years beginning after December 31, 2012, a 0.9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount. The threshold amounts are listed in the chart on this page.

Threshold Amounts for Additional Medicare Tax

Note.

The threshold amounts below are not indexed for inflation.

Filing Status Threshold Amount
Married filing jointly $250,000
Married filing separately $125,000
Single $200,000
Head of household $200,000
Qualifying widow(er) with dependent child $200,000

  Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. A self-employment loss should not be considered for purposes of this tax. Railroad retirement (RRTA) compensation should be separately compared to the threshold.

  Your employer is responsible for withholding the 0.9% Additional Medicare Tax on your Medicare wages or railroad retirement (RRTA) compensation paid in excess of $200,000 in a calendar year. Your employer is required to begin withholding Additional Medicare Tax in the pay period in which your wages or compensation for the year exceed $200,000 and continue to withhold it in each pay period for the remainder of the calendar year.

More information.   The IRS and the Treasury Department have issued final regulations (T.D. 9645) on the Additional Medicare Tax. The final regulations are available at www.irs.gov/irb/2013-51_IRB/ar10.html. For more information on Additional Medicare Tax, visit www.irs.gov and enter the following words in the search box: Additional Medicare Tax.

Who Must File

You must file Form 8959 if one or more of the following applies to you:

  • Your Medicare wages and tips on any single Form W-2 (box 5) are greater than $200,000.

  • Your railroad retirement (RRTA) compensation on any single Form W-2 (box 14) is greater than $200,000.

  • Your total Medicare wages and tips plus your self-employment income (including the Medicare wages and tips and self-employment income of your spouse, if married filing jointly) are greater than the threshold amount for your filing status in the chart on this page.

  • Your total railroad retirement (RRTA) compensation and tips (Form W-2, box 14) (including the railroad retirement (RRTA) compensation and tips of your spouse, if married filing jointly) is greater than the threshold amount for your filing status in the chart on this page.

    Your Medicare wages and tips include amounts from Form W-2, box 5; Form 4137, line 6; and Form 8919, line 6.

    Your self-employment income includes amounts from Schedule SE – Section A, line 4, or Section B, line 6. But negative amounts should not be considered for purposes of Form 8959.

Amounts Subject to Additional Medicare Tax

All wages that are currently subject to Medicare tax are subject to Additional Medicare Tax to the extent they exceed the threshold amount for your filing status. For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Pub. 15 (Circular E), Employer’s Tax Guide.

Your employer must withhold Additional Medicare Tax on wages it pays to you in excess of $200,000 for the calendar year, regardless of your filing status and regardless of wages or compensation paid by another employer.

All railroad retirement (RRTA) compensation that is currently subject to Medicare tax is subject to Additional Medicare Tax to the extent it exceeds the threshold amount for your filing status. A railroad employer must withhold Additional Medicare Tax on compensation it pays to you in excess of $200,000 for the calendar year, regardless of your filing status and regardless of wages or compensation paid by another employer.

You cannot ask your employer to stop Additional Medicare Tax withholding if it is required to withhold it. If you do not owe Additional Medicare Tax, you can claim a credit for any withheld Additional Medicare Tax against the total tax liability shown on your tax return by filing Form 8959.

If you have both wages and self-employment income, the threshold amount for applying Additional Medicare Tax on the self-employment income is reduced (but not below zero) by the amount of wages subject to Additional Medicare Tax. There is no equivalent rule for railroad retirement (RRTA) compensation. See Examples next.

If you are a nonresident alien or a U.S. citizen living abroad, you are required to pay Additional Medicare Tax on Medicare wages, railroad retirement (RRTA) compensation, and self-employment income that exceed the threshold amount for your filing status, without regard to your domicile or citizenship.

Examples

The following examples will assist you in understanding and figuring your Additional Medicare Tax.

Example 1.

Ann, a single filer, has $130,000 in self-employment income and $0 in wages. Ann is not liable to pay Additional Medicare Tax and does not need to file Form 8959 because her self-employment income is less than the $200,000 threshold for single filers.

Example 2.

Bob, a single filer, has $220,000 in self-employment income and $0 in wages. Bob is liable to pay Additional Medicare Tax on $20,000 ($220,000 in self-employment income minus the threshold of $200,000). Bob must file Form 8959.

Example 3.

Carl, a single filer, has $145,000 in self-employment income and $130,000 in wages. Carl’s wages do not exceed $200,000. Therefore, Carl’s employer did not withhold Additional Medicare Tax. However, the $130,000 of wages reduces the self-employment income threshold to $70,000 ($200,000 threshold minus the $130,000 of wages). Carl is liable to pay Additional Medicare Tax on $75,000 of self-employment income ($145,000 in self-employment income minus the reduced threshold of $70,000). Carl must file Form 8959.

Example 4.

Don, who is married and files married filing separately, has $150,000 in self-employment income and $200,000 in wages. Don’s wages do not exceed $200,000. Therefore, Don’s employer did not withhold Additional Medicare Tax. However, the $200,000 of wages reduces the self-employment income threshold to $0 ($125,000 threshold minus the $200,000 of wages). Don is liable to pay Additional Medicare Tax on $75,000 of wages ($200,000 in wages minus the $125,000 threshold for a married filing separately return) and on $150,000 of self-employment income ($150,000 in self-employment income minus the reduced threshold of $0). Don must file Form 8959.

Example 5.

Erin and Frank are married and file jointly. Erin has $150,000 in wages and Frank has $175,000 in wages. Neither Erin nor Frank has wages that exceed $200,000. Therefore, their employers did not withhold Additional Medicare Tax. However, their combined $325,000 in wages exceeds the $250,000 threshold for joint filers. Erin and Frank are liable to pay Additional Medicare Tax on $75,000 of wages ($325,000 in wages minus the $250,000 threshold). Erin and Frank must file Form 8959.

Example 6.

George and Helen are married and file jointly. George has $190,000 in wages and Helen has $150,000 in compensation subject to railroad retirement (RRTA) taxes. George and Helen do not combine their wages and railroad retirement (RRTA) compensation to determine whether they are in excess of the $250,000 threshold for a joint return. George and Helen are not liable to pay Additional Medicare Tax because George’s wages are not in excess of the $250,000 threshold and Helen’s railroad retirement (RRTA) compensation is not in excess of the $250,000 threshold.

Example 7.

Ishmael and Judy are married and file jointly. Ishmael has $160,000 in self-employment income and Judy has $140,000 in compensation subject to railroad retirement (RRTA) taxes. The $140,000 of railroad retirement (RRTA) compensation does not reduce the threshold at which Additional Medicare Tax applies to self-employment income. Ishmael and Judy are not liable to pay Additional Medicare Tax because Ishmael's self-employment income is not in excess of the $250,000 threshold and Judy’s railroad retirement (RRTA) compensation is not in excess of the $250,000 threshold.

Income Tax Withholding and Estimated Tax Payments for 2014

Depending upon your filing status, wages, railroad retirement (RRTA) compensation and self-employment income, you may owe more than what was withheld by your employer. If you anticipate having a liability for Additional Medicare Tax for 2014, you may request that your employer withhold an additional amount of income tax. You make the request by filing a new Form W-4, Employee's Withholding Allowance Certificate, with your employer. The additional income tax withholding will be applied against the taxes shown on your tax return, including any Additional Medicare Tax liability. You cannot request additional withholding specifically for Additional Medicare Tax. For more information on tax withholding, see Pub. 505, Tax Withholding and Estimated Tax.

To the extent Additional Medicare Tax is not withheld by your employer, you must pay the tax. If you anticipate that you will owe Additional Medicare Tax for 2014 but will not satisfy the liability through withholding, you may need to make estimated tax payments. You should consider your estimated total tax liability in light of your wages, compensation, and self-employment income and the threshold amount for your filing status when determining whether estimated tax payments are necessary. Any estimated tax payments you make will apply to any and all taxes on your tax return, including any Additional Medicare Tax. You cannot designate any estimated payments specifically for Additional Medicare Tax.

If you intend to file a joint return for 2014 and you anticipate that the combined wages and self-employment income of you and your spouse are going to be more than $250,000, you may want to request additional withholding on Form W-4 and/or make estimated payments. If you are in a community property state and plan to file as married filing separately, see Pub. 555 for more information on the treatment of withheld income taxes.

In general, you do not have to make estimated tax payments if you expect that your 2014 return will show a tax refund or a tax balance due of less than $1,000. If your total estimated tax for 2014 is $1,000 or more, see Form 1040-ES (or Form 1040-ES (PR) if a resident of Puerto Rico) and Pub. 505 for a worksheet you can use to see if you have to make estimated tax payments. For more details, see Pub. 505.

Estimated tax penalty.   You may be subject to a penalty for failure to make estimated tax payments if you owe Additional Medicare Tax and wait to pay the tax with your tax return. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its separate instructions to determine if the penalty applies to you.


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