IRS Issues Q&As on the Additional Medicare Tax under the Affordable Care Act


Social Security and Medicare are funded in large part through payroll taxes imposed by the Federal Insurance Contributions Act or “FICA.” FICA imposes a tax of 15.3% on “wages,” which is paid by the employer and by employees, each party paying half. Before 2013, the employer portion of the tax (the so-called “hospital insurance” or “HI” portion) was 1.45% and the employee portion was also 1.45%. 1 The Patient Protection and Affordable Care Act (the “Act”) imposes an additional tax — referred to as the “Additional Hospital Insurance Tax on High- Income Taxpayers and Unearned Income” or, simply the “Additional Medicare Tax” — that increases the employee portion of the HI tax by 0.9% of wages on workers with incomes of over $200,000 for single filers and $250,000 for joint filers effective for taxable years commencing after December 31, 2012.

Employers are responsible for withholding the Additional Medicare Tax. The tax is also levied on self-employed individuals whose incomes exceed the specified thresholds. (Self employed individuals are not permitted to deduct this additional tax as a business expense.) Liability for the Additional Medicare Tax is on the employee only — there is no employer match.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Mintz Levin - Employment Matters | Attorney Advertising

Written by:


Mintz Levin - Employment Matters on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.