Employers will be required to withhold additional amounts from the wages of high-earning employees beginning January 1, 2013. That’s when the Medicare tax rate will increase by .9% (from 1.45% to 2.35%) on wages over $200,000 for single filers, wages over $250,000 for joint filers, and wages over $125,000 for persons married filing separately.
Employers are required to withhold this additional Medicare tax if an employee receives wages of more than $200,000 from that particular employer. Employers are not required to consider a spouse’s wages, or whether an employee earns wages at a second job, in determining whether to withhold the extra .9%.
Employers who do not withhold the additional tax are subject to the regular Internal Revenue Code penalties that apply to other failures regarding proper wage withholding. Unlike the regular 1.45% tax, employees are responsible for paying the additional .9% tax if an employer fails to do so. The employer portion of the Medicare tax will remain unchanged at 1.45%.
The agencies have not yet released any guidance on this new withholding obligation.
Today’s post was contributed by Jessica Faith.
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