Topic 560 - Additional Medicare Tax

For tax years beginning after December 31, 2012, a 0.9% Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation that exceeds the following threshold amounts based on filing status:

  • $250,000 for married filing jointly;
  • $125,000 for married filing separately; and
  • $200,000 for all other taxpayers.

Medicare wages and self-employment income are combined to determine if 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.

All Medicare wages, railroad retirement (RRTA) compensation, and self-employment income currently subject to Medicare Tax are subject to Additional Medicare Tax, if paid in excess of the applicable threshold for the taxpayer’s filing status. For more information on what wages are subject to Medicare Tax, see the chart on Special Rules for Various Types of Services and Payments in Section 15 of Publication 15, (Circular E), Employer’s Tax Guide.

There are no special rules for nonresident aliens and U.S. citizens living abroad for purposes of this provision. Medicare wages, railroad retirement (RRTA) compensation, and self-employment income earned by such individuals will also be subject to Additional Medicare Tax, if in excess of the applicable threshold for their filing status.

An employer is responsible for withholding the Additional Medicare Tax from wages or railroad retirement (RRTA) compensation it pays to an employee in excess of $200,000 in a calendar year, without regard to filing status. An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages or railroad retirement (RRTA) compensation in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. There is no employer match for Additional Medicare Tax.

Some taxpayers may need to adjust their withholding or make estimated tax payments to account for their Additional Medicare Tax liability.

This new tax is computed on Form 8959 (PDF), Additional Medicare Tax. Individuals report this tax on Form 1040 (PDF), U.S. Individual Income Tax Return. For additional information, refer to the Form 8959 Instructions (PDF) and our questions and answers on IRS.gov.

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Page Last Reviewed or Updated: February 27, 2014