Summit Blog
Monday, November 29, 2010
Changes To Medicare Tax For High Earners
Recent legislation is changing the Medicare tax starting in 2013. The Medicare tax rate will increase from 1.45% to 2.35% on wages earned over $200,000 for single filers and $250,000 for joint filers ($125,000 for a married individual filing separately).
Because employers will not know the wages of an employee’s spouse, they are directed to withhold the increased amount from all workers with wages exceeding $200,000, regardless of the marital status claimed on their Form W-4. Overwithholding and underwithholding for employees will be reconciled when they file their tax returns.
Employers do not have to match the increased Medicare tax amounts withheld from employees’ wages. Self-employed individuals will also be subject to the Medicare
tax increase if they meet the income thresholds, and will not be allowed to deduct the
additional tax as a business expense.
If you have any questions about this change feel free to contact your payroll specialist.
Steven J. Kessler C.P.P.
Payroll/HR Advisor
Summit HR and Payroll