Here’s what HIVE AI had to say about “What income triggers the Additional Medicare Tax?”:
What income triggers the Additional Medicare Tax
Overview
The 0.9% Additional Medicare Tax applies when an individual’s earnings exceed filing-status thresholds. It is imposed on:
- Medicare wages (FICA wages)
- Self-employment income (subject to SE Medicare tax)
- Railroad Retirement Tax Act (RRTA) compensation
It does not apply to investment income; that is addressed by the separate Net Investment Income Tax. 1
Filing-status thresholds
- Married filing jointly: $250,000
- Married filing separately: $125,000
- All other filers (single, head of household, qualifying surviving spouse): $200,000
These thresholds are used to determine liability on wages, self-employment income, and RRTA compensation. 2
How it applies by income type
Wages (FICA)
- You owe the 0.9% tax on FICA Medicare wages above your filing-status threshold.
- Employers must withhold the 0.9% once your wages paid by that employer exceed $200,000 in the calendar year, regardless of your ultimate filing status or other income. Any remaining liability is settled on your tax return. 3
Self-employment income
- Compute Additional Medicare Tax on SE income above your filing-status threshold after reducing that threshold by any Medicare wages for the year (not below zero). 4
RRTA compensation
- Apply the filing-status threshold separately to RRTA compensation; do not combine RRTA with FICA wages for threshold purposes. 5
Statutory foundation
- For self-employment income, the Additional Medicare Tax is 0.9% on SE income exceeding $250,000 (MFJ), $125,000 (MFS), or $200,000 (others). Thresholds are coordinated with FICA wages by reducing the SE threshold by Medicare wages taken into account under FICA Additional Medicare Tax. 6
Practical notes
- Having both wages and SE income: calculate the tax on wages over the threshold first; then reduce the SE threshold by total wages and compute tax on SE income over the reduced threshold. 7
- Employers start withholding once an employee’s wages with that employer exceed $200,000, even if the employee will not owe the tax based on filing status. Any over- or under-withholding is reconciled on the individual return (Form 8959). 3
Sources
1 – IRS.gov – Find out if net investment income tax applies to you 📄 Summarize
2 – IRS.gov – Affordable Care Act tax provisions for individuals 📄 Summarize
3 – IRS – Instruction W-2 and W-3 General Instructions for Forms W-2 and W-3 (Including Forms W-2AS, W-2CM, W-2GU, W-2VI, W-3SS, W-2c, and W-3c) 📄 Summarize
4 – Treasury Regulation 1.1401-1 📄 Summarize
5 – IRS.gov – Questions and answers for the Additional Medicare Tax 📄 Summarize
6 – IRC § 1401(b) 📄 Summarize
7 – IRS.gov Tax Topics 📄 Summarize
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