Instructions for Form 8959 (2018)

Additional Medicare Tax

Section references are to the Internal Revenue Code unless otherwise noted.

2018


Instructions for Form 8959 - Introductory Material

What’s New

2018 Form 1040 redesigned. The 2018 Form 1040 has been redesigned and is supplemented with new Schedules 1 through 6. These additional schedules will be used as needed to complete more complex tax returns. References to Form 1040 and its related schedules have been revised accordingly in these instructions.

Future Developments

For the latest information about developments related to Form 8959 and its instructions, such as legislation enacted after they were published, go to IRS.gov/Form8959.

Reminders

Missing or incorrect Form W-2. Your employer is required to furnish Form W-2 to you no later than January 31, 2019. If you don't receive your Form W-2 by early February, see Tax Topic 154 to find out what to do. Tax topics are available at IRS.gov/TaxTopics. Even if you don't get a Form W-2, you must still figure your Additional Medicare Tax. If you lose your Form W-2 or it is incorrect, ask your employer for a new one.

Forms W-2 of U.S. possessions. References to Form W-2 on Form 8959 and in these instructions also apply to Forms W-2AS, W-2CM, W-2GU, W-2VI, and 499R-2/W-2PR. However, for Form 499R-2/W-2PR, Medicare wages and tips are reported in box 19 and Medicare tax withheld is reported in box 20.

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.

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If you are filing Form 8959, you must file one of the forms listed above. Don't attach Form 8959 to Form 1040NR-EZ.

Additional Medicare Tax.

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 aren't 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) $200,000

 

Medicare wages and self-employment income are combined to determine if your income exceeds the threshold. A self-employment loss shouldn't 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 IRS.gov/irb/2013-51_IRB#TD-9465. For more information on Additional Medicare Tax, go toIRS.gov/ADMT.

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 singleForm W-2 (box 5) are greater than $200,000.

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

  • Your total Medicare wages and tips plus your self-employment income, if any (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 include your wages and tips from Form W-2, box 5; your tips from Form 4137, line 6; and your wages from 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 shouldn't be considered for purposes of Form 8959.

    If your Medicare wages, railroad retirement (RRTA) compensation, or self-employment income is adjusted, you may need to correct your liability, if any, for Additional Medicare Tax. When correcting Additional Medicare Tax liability, attach a corrected Form 8959, to your original return or amended return, as applicable. If you are correcting Medicare wages or railroad retirement (RRTA) compensation, also attach Form W-2, Wage and Tax Statement, or Form W-2c, Corrected Wage and Tax Statement.

 

Amounts Subject to Additional Medicare Tax

All wages that are 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 can't ask your employer to stop Additional Medicare Tax withholding if it is required to withhold it. If you don't 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 below.

There are no special rules for Additional Medicare Tax for nonresident aliens and U.S. citizens living abroad. Wages, railroad retirement (RRTA) compensation, and self-employment income that are subject to Medicare tax will also be subject to Additional Medicare Tax if in excess of the applicable threshold.

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 isn't liable for Additional Medicare Tax and doesn't 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 for 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 don't exceed $200,000. Therefore, Carl’s employer didn't 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 for 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 don't exceed $200,000. Therefore, Don’s employer didn't withhold Additional Medicare Tax. However, Don is liable for Additional Medicare Tax on $75,000 of wages ($200,000 in wages minus the $125,000 threshold for a married filing separately return). In addition, the $200,000 of wages reduces the self-employment income threshold to $0 ($125,000 threshold minus the $200,000 of wages). Don is also liable for Additional Medicare Tax 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 didn't withhold Additional Medicare Tax. However, their combined $325,000 in wages exceeds the $250,000 threshold for joint filers. Erin and Frank are liable for 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. Neither George nor Helen has wages or compensation that exceed $200,000. Therefore, their employers didn't withhold Additional Medicare Tax. George and Helen don't 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 aren't liable for Additional Medicare Tax because George’s wages aren't in excess of the $250,000 threshold and Helen’s railroad retirement (RRTA) compensation isn't 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. Judy's compensation didn't exceed $200,000. Therefore, Judy's employer didn't withhold Additional Medicare Tax. The $140,000 of railroad retirement (RRTA) compensation doesn't reduce the threshold at which Additional Medicare Tax applies to self-employment income. Ishmael and Judy aren't liable for Additional Medicare Tax because Ishmael's self-employment income isn't in excess of the $250,000 threshold and Judy’s railroad retirement (RRTA) compensation isn't in excess of the $250,000 threshold.

 

Income Tax Withholding and Estimated Tax Payments for 2019

Depending upon your filing status, wages, railroad retirement (RRTA) compensation, and self-employment income, you may owe more than the amount that was withheld by your employer. If you anticipate having a liability for Additional Medicare Tax for 2019, 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 can't request additional withholding specifically for Additional Medicare Tax. For more information on tax withholding, see Pub. 505.

To the extent Additional Medicare Tax isn't withheld by your employer, you must pay the tax. If you anticipate that you will owe Additional Medicare Tax for 2019 but won't 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 can't designate any estimated tax payments specifically for Additional Medicare Tax.

If you intend to file a joint return for 2019 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 don't have to make estimated tax payments if you expect that your 2019 return will show a tax refund or a tax balance due of less than $1,000. If your total estimated tax for 2019 is $1,000 or more, see Form 1040-ES (or Form 1040-ES (NR) if a nonresident alien 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 (or Form 2210-F for farmers and fishermen) and its separate instructions to determine if the penalty applies to you.

Specific Instructions

Name(s).

Print or type your name (and your spouse's name if filing a joint return) exactly as it is entered on your return.

Social security number.

The social security number on this form should match the social security number on your tax return. If you are married and filing a joint return, enter the first social security number that appears on your return.

Part I—Additional Medicare Tax on Medicare Wages

If you (and your spouse if filing a joint return) didn't have Medicare wages, skip Part I and go to Part II.

Line 1

Enter your Medicare wages and tips from box 5 of your Form W-2. If you have more than one Form W-2, enter the total of the amounts from box 5. If you are filing a joint return, also include your spouse’s wages and tips.

Line 2

Enter unreported tips from line 6 of Form 4137, Social Security and Medicare Tax on Unreported Tip Income. If you are filing a joint return, also include the amount from line 6 of your spouse's Form 4137.

Penalty for not reporting tips.

If you didn't report tips to your employer as required, you may be charged a penalty equal to 50% of the social security, Medicare, and Additional Medicare taxes due on those tips. You can avoid this penalty if you can show that your failure to report tips to your employer was due to reasonable cause and not due to willful neglect. To do so, you can attach a statement to your return explaining why you didn't report them or submit a statement in response to a notice regarding a proposed penalty assessment. For more information about tip reporting, seePub. 531.

Line 3

Enter wages from line 6 of Form 8919, Uncollected Social Security and Medicare Tax on Wages. If you are filing a joint return, also include the amount from line 6 of your spouse's Form 8919.

Line 7

Multiply line 6 by 0.9% (0.009). This is your Additional Medicare Tax on your wages. Enter the result on this line and go to Part II.

Part II—Additional Medicare Tax on Self-Employment Income

If you (and your spouse if filing a joint return) didn't have self-employment income, skip Part II and go to Part III.

Line 8

Form 1040 and 1040NR filers.

Enter your self-employment income from Schedule SE, Section A, line 4, or Section B, line 6. Combine amounts from these lines if you have entries on both Section A, line 4, and Section B, line 6, or if you have multiple Schedules SE.

Form 1040-SS and 1040-PR filers.

Enter the self-employment income from Part V, line 6.

Self-employment income less than $400.

Do not include any of the following amounts on line 8.

  1. The amount on Schedule SE, Section A, line 4, if it is less than $400.

  2. The amount on Schedule SE, Section B, line 6, if it is less than $400 and the amount on line 5b is -0- or blank. However, if line 5b is $100 or more, include that amount on line 8.

  3. The amount on Form 1040-SS or Form 1040-PR, Part V, line 6, if it is less than $400 and the amount on line 5b is -0- or blank. However, if line 5b is $100 or more, include that amount on line 8.

 

Line 13

Multiply line 12 by 0.9% (0.009). This is your Additional Medicare Tax on self-employment income. Enter the result on this line and go to Part III.

Example.

Kathleen and Liam are married and file a joint return. Kathleen has $130,000 in wages (included on line 4 of Form 8959). Liam has $140,000 in self-employment income (included on line 8 of Form 8959). The $130,000 of Kathleen’s wages reduces Liam’s self-employment income threshold to $120,000 ($250,000 threshold minus the $130,000 of wages, as figured on lines 9 through 11 of Form 8959). Kathleen and Liam are liable for Additional Medicare Tax on $20,000 of Liam’s self-employment income ($140,000 in self-employment income minus the reduced threshold amount of $120,000, as figured on line 12 of Form 8959). Kathleen and Liam owe Additional Medicare Tax of $180.00 ($20,000 x 0.9% (0.009), as figured on line 13 of Form 8959). Kathleen and Liam must file Form 8959.

Part III—Additional Medicare Tax on Railroad Retirement Tax Act (RRTA) Compensation

If you (and your spouse if filing a joint return) didn't have railroad retirement (RRTA) compensation, skip Part III and go to Part IV.

Line 14

Enter the total of your railroad retirement (RRTA) compensation and tips. The amount of railroad retirement (RRTA) compensation for a railroad employee is reported on Form W-2, box 14. If you have more than one Form W-2, enter the total of the railroad retirement (RRTA) compensation amounts from box 14 of all Forms W-2. If you are filing a joint return, also include your spouse’s railroad retirement (RRTA) compensation. An employee representative subject to RRTA taxes should include the total compensation subject to Tier 1 Medicare tax as reported on line 2 of Form CT-2 (include the total of the compensation amounts from line 2 of all Forms CT-2 filed for 2018).

Line 17

Multiply line 16 by 0.9% (0.009). This is your Additional Medicare Tax on railroad retirement (RRTA) compensation. Enter the result on this line and go to Part IV.

Part IV—Total Additional Medicare Tax

Line 18

Include the amount from line 18 on the following line of your tax return.

  • Line 62 of Schedule 4 (Form 1040) (check box a).

  • Line 60 of Form 1040NR (check box a).

  • Line 5 in Part I of Form 1040-SS.

  • Line 5 in Part I of Form 1040-PR.

 

Part V—Withholding Reconciliation

Use Part V to figure the amount of Additional Medicare Tax on wages and railroad retirement (RRTA) compensation withheld by your employer.

If you (and your spouse if filing a joint return) didn't have Medicare wages or railroad retirement (RRTA) compensation, leave Part V blank.

Line 19

Enter the amount of Medicare tax withheld, if any, reported on Form W-2, box 6. If you have more than one Form W-2, add the amounts in box 6 of all your Forms W-2 and enter the total here. If you are filing a joint return, include your spouse’s Medicare tax withheld.

Also include any uncollected Medicare tax on tips from Form W-2, box 12, code B, and any uncollected Medicare tax on the taxable cost of group-term life insurance over $50,000 (for former employees) fromForm W-2, box 12, code N. If you have more than one Form W-2, add the amounts in box 12, codes B and N, of all your Forms W-2 and enter the total here. If you are filing a joint return, also include these amounts, if any, from your spouse's Form(s) W-2. However, don't include any amounts reported on Form W-2, box 12, codes B and N, for uncollected RRTA Medicare tax.

Note.

Both Medicare tax and Additional Medicare Tax withholding are reported together on Form W-2, box 6.

 

Line 23

Enter the amount of Additional Medicare Tax withheld, if any, reported on Form W-2, box 14. If you have more than one Form W-2, add the amounts in box 14 of all your Forms W-2 and enter the total here. If you are filing a joint return, include your spouse’s Additional Medicare Tax withheld. An employee representative subject to RRTA taxes should include the total Additional Medicare Tax paid as reported on line 3 of Form CT-2 (include the total Additional Medicare Tax paid from line 3 of all Forms CT-2 filed for 2018).

Line 24

Include the amount from line 24 on the following line of your tax return.

  • If you file Form 1040, include this amount on line 16, combined with your federal income tax withholding.

  • If you file Form 1040NR, include this amount on line 62a, combined with your federal income tax withholding.

  • If you file Form 1040-SS, include this amount on line 11 of Part I.

  • If you file Form 1040-PR, include this amount on line 11 of Part I.



Attach your completed Form 8959 to Form 1040, 1040NR, 1040-SS, or 1040-PR.