Topic Number 560 - Additional Medicare Tax
A 0.9% Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation that exceed 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.
If you receive both Medicare wages and self-employment income, calculate the Additional Medicare Tax by:
- Calculating the Additional Medicare Tax on any Medicare wages in excess of the applicable threshold for the taxpayer's filing status, without regard to whether any tax was withheld;
- Reducing the applicable threshold for the filing status by the total amount of Medicare wages received (but not below zero); and
- Calculating the Additional Medicare Tax on any self-employment income in excess of the reduced threshold.
Don't consider a self-employment loss for purposes of this tax. Compare Railroad retirement (RRTA) compensation separately to the threshold.
All Medicare wages, railroad retirement (RRTA) compensation, and self-employment income 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.
No Special Rules if Living Abroad
There are no special rules for nonresident aliens or U.S. citizens and resident aliens 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 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. There's no employer match for Additional Medicare Tax.
Computing the Tax
Use Form 8959.pdf, Additional Medicare Tax, to compute this tax, and report this tax and any Additional Medicare Tax withheld on Form 1040.pdf, U.S. Individual Income Tax Return, Form 1040NR.pdf, U.S. Nonresident Alien Income Tax Return, or Form 1040-SS.pdf, U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico).
Tax Withholding and Estimated Tax
Some taxpayers may need to request that their employer withhold an additional amount of income tax withholding on Form W-4.pdf, Employee’s Withholding Allowance Certificate, or make estimated tax payments to account for their Additional Medicare Tax liability. See Publication 505, Tax Withholding and Estimated Tax, for more information in either instance.
For additional information, refer to the Form 8959 Instructions and to Questions and Answers for the Additional Medicare Tax.