Small business tax Q&A: February ’16 — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Small business tax Q&A: February ’16

Get PDF file

by on
in Small Business Tax Deduction Strategies

Hitting the threshold on payroll tax

Q. In a recent item (SBTS, December 2015), you talk about the 2.35% Medicare tax. Isn’t there a threshold for this tax? D.B., via email

A. Yes. As opposed to the standard Medicare tax withholding of 1.45% on all your wages, the additional 0.9% Medicare tax, which was created by the Affordable Care Act (ACA), applies to wages above $200,000 for an unmarried taxpayer or $250,000 for a joint-filing married couple (based on the combined wages of both spouses). For example, if you are unmarried and earn $275,000, the additional 0.9% Medicare tax will be withheld on the last $75,000 of your wages. The standard 1.45% Medicare tax will be withheld on the entire $275,000, and the 6.2% Social Security tax will be withheld on the first $118,500 of wages.  

Tip: The $200,000/$250,000 threshold for the additional 0.9% Medicare tax isn’t indexed for inflation.

Roth IRAs accept cash only       

Q. Can ...(register to read more)

To read the rest of this article you must first register with your email address.

Email Address:

Leave a Comment

 

Previous post:

Next post: