Medicare Extra Withholding – Affordable Care Act’s 0.9%

Many of you won’t care at all about this, but since a client raised the question, I thought it was interesting and hadn’t realized it before. CPAs pay attention–one of you messed this up and generated a question from a client.

Single individuals that earn over $200,000 have an extra 0.9% Medicare tax added to their Medicare withholding. Married individuals have the extra Medicare tax added for wages over $250,000.

Why, one of our clients asked, does a married individual get the 0.9% deducted when they make over $200,000. Something must be wrong with the tax software.

Nope. See, specifically the answer to question #11. Everyone gets the extra 0.9% withheld at $200,000. Married folk get it back when they file their tax return.

That’s the IRS for you! Of course, most of us would like to have this problem, wouldn’t we?