Additional Medicare Tax for High Income Taxpayers

Beginning in 2013, an additional Medicare tax will apply for individuals
with wage income, other compensation, and/or self-employment income that
exceed certain threshold amounts. The additional Medicare tax is
calculated as 0.9% of the total of wages, other compensation, and
self-employment income that is in excess of the taxpayer’s threshold
amount. For those taxpayers that receive more than $200,000 in wages
from their employer, the employer is required to withhold 0.9% of their
wages over $200,000. All other taxpayers that this new tax applies to
can request an additional amount be withheld from their wages, or
increase their estimated tax payments for Tax Year 2013 to ensure that
they do not incur an underpayment penalty. A taxpayer that is affected
by the additional Medicare tax will calculate the additional tax on a
new 2013 Federal form and will be included in the Other Taxes section of
Form 1040. For married couples, the applicable income for both spouses
is combined to determine if the additional Medicare tax applies.
Additionally, for self-employed individuals, this tax is not used in
calculating the deductible portion of self-employment tax on Form 1040,
line 27.