November 2012 Health Care Reform

November 2012 Health Care Reform

by Posted on: November 7, 2012Categories: HR & Compliance   

Additional Medicare Tax

The Affordable Care Act (ACA) increases the Medicare hospital insurance tax rate for high-income individuals beginning in 2013. The Additional Medicare Tax applies to individuals’ wages, other compensation and self-employment income over certain thresholds. Employers are responsible for withholding the tax on wages and other compensation in certain circumstances.

The Additional Medicare Tax goes into effect for taxable years beginning after December 31, 2012. The rate is 0.9 percent. The threshold for amount varies between $125,000 if married filing separate and $250,000 if married and filing jointly. All wages that are currently subject to Medicare Tax are subject to Additional Medicare Tax if they are paid in excess of of the applicable threshold for an individual’s filing status. The tax is also expanded to include a 3.8 percent tax on unearned income in the case of an individual taxpayers earning over $200,000 and $250,000 for married couples filing jointly.


Additional Resources:

Click here to view the Legislative Brief on the Additional Medicare Tax

Click here to view IRS Publication 15 (Circular E) Employer’s Tax Guide

Click here to view IRS Publication 15-B, Employer’s Tax Guide to Fringe Benefits

Click here to view IRS Publication 15-A, Employer’s Supplemental Tax Guide



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