A couple of weeks ago the IRS released the final regulations for the additional 0.9% Medicare Tax that was imposed under the Affordable Care Act. These regulations are effective beginning with the 2013 tax year.
Under the new regulations, employers are required to withhold an additional 0.9% in Medicare Tax on income over $200,000.00 for single taxpayers, $250,000.00 for married filing joint, or $125,000.00 for married filing separate taxpayers.
This additional withholding applies to wages, railroad retirement compensation and self-employment.
Those taxpayers who have more than one source of household income need to be aware of what their year to date income is. If their combined wages exceed the threshold they need to notify their employer and have additional Medicare Taxes withheld. An alternative to having the employer withhold the additional tax would be to make estimated tax payments to the IRS on their own.
With only 3 weeks left in 2013, now is the time to make sure your withholdings are in order to avoid being hit with large payments or penalties come tax filing time.