Additional Medicare Taxes

Sometimes, depending on income, you may owe more money to Medicare. This is known as the additional Medicare tax, which is assessed at a 9% tax rate. For those who owe, tax time can be simpler if you’re aware of the following:

Income threshold: your income, including Medicare wages, Self-Employment income and railroad retirement compensation, has to exceed certain thresholds before the tax kicks in. All of your income is added together including regular and Self-Employment income in order to calculate the tax, and any loss from Self-Employment is not factored in. See Form 8959, Additional Medicare Tax, for more information.

Filing status: your filing status determines that income threshold. For example, those filing married filing jointly, will combine both spouses’ wages and income, and then compare it to the threshold amounts.

  • Married filing jointly: $250,000
  • Married filing separately: $125,000
  • Single: $200,000
  • Head of household: $200,000
  • Qualifying widow(er): $200,000

Employer responsibility: if you work for an employer, it is their responsibility to withhold any additional Medicare taxes if you earn more than $200,000 per year. If you are self-employed, you can determine whether you owe when you calculate your estimated taxes. You may have to pay a penalty if you didn’t have enough withheld or did not pay enough.

Form 8959: file Form 8959 along with your regular tax return if you owe the tax. You can report the amount you owe employer withheld on this form as well.