Employers Need to Watch Additional Medicare Tax
In 2013 the Affordable Care Act (ACA) added an additional 0.9% Medicare tax on the excess earnings. Taxpayers with FICA wages over $200,000 per year ($250,000 for joint filers and $125,000 for married filing separately) had to pay more.
Unlike regular Medicare taxes, this additional Medicare tax does not include a corresponding employer portion. But, employers must withhold the additional tax to the extent that an employee’s wages exceed $200,000 in a calendar year. The $200,000 amount doesn’t include the employee’s income from any other sources nor does it take into account their tax filing status.
The IRS released the final regulations in November 2013 regarding the additional tax and the employer withholding requirements. The only substantial change from the proposed regulation was that employers no longer get relief from payment liability for any additional Medicare tax that was required to be withheld but that they didn’t withhold, unless the employer can provide evidence that the employee has paid the tax.
At Ciuni & Panichi, Inc., we know what the requirements are and we would be happy to answer your questions about them to make sure you are in compliance with these requirements. Please contact Jim Komos at 216.831.7171 or jkomos@cp-advisors.com for more information or with any questions you may have.
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