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Head off employees’ additional Medicare tax woes

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in Payroll Today

Employers must withhold the 0.9% additional Medicare tax once an employee’s wages exceed $200,000. Problem: While liability for the tax is based on employees’ marital status, you must withhold as if employees were unmarried. Upshot: Employees may be underwitheld or overwithheld at the end of the year, depending on their marital and filing status. Bad news: Spouses and registered domestic partners who live in community property states may need to do some extra math.

Now is the time to advise employees that they can either refile their W-4s for the remainder of the year or pay estimated taxes to make up for any potential underwithholding. Here’s what you should tell them.

Filing status and threshold amounts

Employees are liable for the additional Medicare tax if their wages or self-employment income, together with their spouses’ wages or self-employment income exceed these thresholds:

  • Married filing jointly: $250,000
  • Marrie...(register to read more)

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