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FORM 8959
Additional Medicare Tax.
This is not the regular 1.45% Medicare tax. It is an extra 0.9% that starts only after a filing-status threshold, and there is no employer match.
| Filing status | Threshold |
|---|---|
| Single, or head of household | $200,000 |
| Married filing jointly | $250,000 |
| Married filing separately | $125,000 |
On $220,000 of wages, a single person pays the extra 0.9% on $20,000, which is $180 for the year. The regular 1.45% still applies to the entire $220,000. Social Security has already stopped at $184,500, so the stack on the last dollars is Medicare plus Additional Medicare, not Social Security.
Employers must start withholding the 0.9% when an employee’s wages at that employer pass $200,000, even if the employee will file jointly and the household threshold is $250,000. A joint couple can therefore have Additional Medicare withheld and owe none, or owe more than was withheld if each spouse stayed under $200,000 at their own job but the household crossed $250,000. The paycheck calculator uses the filing status you pick, which matches the tax, not the employer’s $200,000 switch.
Questions
Does my employer pay the 0.9% too?
No. Additional Medicare Tax is employee-only.
Does a 401(k) reduce it?
No. Additional Medicare Tax is on Medicare wages. A traditional 401(k) does not reduce Social Security or Medicare wages.
Sources
Withholding and the tax are not the same threshold
An employer starts the extra 0.9% when wages at that employer pass $200,000, even if the employee will file jointly and the household threshold is $250,000. A couple can therefore have the tax withheld and owe none, or owe it with nothing withheld if each spouse stayed under $200,000 and the household crossed $250,000. The paycheck calculator follows the filing status you pick, which matches the tax on Form 8959, not the employer’s $200,000 switch.
A traditional 401(k) does not reduce Medicare wages. Putting the deferral in the calculator lowers federal income tax and leaves the Additional Medicare line alone. There is no employer match on the 0.9%.
$220,000 single, and a joint couple who never see the withholding
A single filer with $220,000 of Medicare wages pays the extra 0.9% on $20,000, which is $180. Regular Medicare at 1.45% is still due on the entire $220,000, which is $3,190. Social Security has already stopped at $184,500, so the employee Social Security is capped at $11,439. The stack on the last dollars is Medicare plus Additional Medicare, not Social Security.
Two spouses each earning $150,000 never trip an employer’s $200,000 withholding switch, and the household at $300,000 is $50,000 over the joint threshold. The extra tax is 0.9% of $50,000, which is $450, and it shows up on the return rather than on either stub. The paycheck calculator will show that $450 only if you enter the combined wages and choose married filing jointly.