credit works
is that if for instance you pay $50,000 a year toward employees' health care
premiums and if you qualify for a 15 percent credit, you save $7,500. This
credit can be carried back or forward for employers who did not own tax
during the year. to be eligible, you must cover at least 50 percent of the
cost of employee-only health care coverage for each of your employees and
must have less than 25 full-time equivalent employees. These employees must
have average wages of less than $50,000 per year.
Additional Medicare Tax
For tax years beginning after December 31, 2012,
a 0.9% Additional Medicare Tax applies to Medicare wages,
self-employment income, and railroad retirement (RRTA)
compensation based on incomes of married filing jointly
taxpayers that exceeds $250,000. For tax years beginning after December 31, 2012,
a 0.9% Additional Medicare Tax applies to Medicare wages,
self-employment income, and railroad retirement (RRTA)
compensation based on incomes of single taxpayers that exceeds
$200,000. For tax years beginning after December 31, 2012,
a 0.9% Additional Medicare Tax applies to Medicare wages,
self-employment income, and railroad retirement (RRTA)
compensation based on incomes of married filing separate
taxpayers that exceeds $125,000.
For tax years beginning after December 31, 2012,
a 0.9% Additional Medicare Tax applies to Medicare wages,
self-employment income, and railroad retirement (RRTA)
compensation based on incomes of head of household taxpayers
that exceeds $200,000. Medicare wages and
self-employment income are combined to determine if income exceeds the
Additional Medicare Tax threshold. All Medicare wages, railroad retirement (RRTA)
compensation, and self-employment income currently subject to
Medicare Tax are subject to Additional Medicare Tax if paid in
excess of the applicable threshold for the taxpayer's filing status.
There are no special rules for nonresident aliens
and U.S. citizens living abroad for purposes of the additional
Medicare tax provision. Medicare wages, railroad retirement (RRTA)
compensation, and self-employment income earned by such
individuals will also be subject to Additional Medicare Tax, if
in excess of the applicable threshold for their filing status.An employer is responsible for withholding the
Additional Medicare Tax from wages or railroad retirement (RRTA)
compensation it pays to an employee in excess of $200,000 in a
calendar year regardless of filing status. An employer is required to begin withholding
Additional Medicare Tax in the pay period in which it pays wages
or railroad retirement (RRTA) compensation in excess of $200,000
to an employee and continue to withhold it each pay period until
the end of the calendar year. To account for their Additional Medicare Tax
liability, some taxpayers may need to adjust their withholding
or make estimated tax payments.
The Additional
Medicare Tax was added by the Affordable Care Act (ACA). It applies to
wages, railroad retirement (RRTA) compensation, and self employment income
over certain limits. Employers are held accountable for withholding the tax.
RRTA is also subject to the Medicare Tax and to the Additional Medicare Tax
if it goes over certain amounts.
