Instructions For Form 8959 - Additional Medicare Tax - 2014 Page 2
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4You cannot ask your employer to stop
self-employment income ($150,000 in
withholding specifically for Additional
Additional Medicare Tax withholding if it is
self-employment income minus the reduced
Medicare Tax. For more information on tax
required to withhold it. If you do not owe
threshold of $0). Don must file Form 8959.
withholding, see Pub. 505, Tax Withholding
Additional Medicare Tax, you can claim a
and Estimated Tax.
Example 5. Erin and Frank are married
credit for any withheld Additional Medicare
and file jointly. Erin has $150,000 in wages
To the extent Additional Medicare Tax is
Tax against the total tax liability shown on
and Frank has $175,000 in wages. Neither
not withheld by your employer, you must pay
your tax return by filing Form 8959.
Erin nor Frank has wages that exceed
the tax. If you anticipate that you will owe
$200,000. Therefore, their employers did not
Additional Medicare Tax for 2015 but will not
If you have both wages and
withhold Additional Medicare Tax. However,
satisfy the liability through withholding, you
self-employment income, the threshold
their combined $325,000 in wages exceeds
may need to make estimated tax payments.
amount for applying Additional Medicare Tax
the $250,000 threshold for joint filers. Erin
You should consider your estimated total tax
on the self-employment income is reduced
and Frank are liable to pay Additional
liability in light of your wages, compensation,
(but not below zero) by the amount of wages
Medicare Tax on $75,000 of wages
and self-employment income and the
subject to Additional Medicare Tax. There is
($325,000 in wages minus the $250,000
threshold amount for your filing status when
no equivalent rule for railroad retirement
threshold). Erin and Frank must file Form
determining whether estimated tax payments
(RRTA) compensation. See Examples, next.
8959.
are necessary. Any estimated tax payments
There are no special rules for Additional
you make will apply to any and all taxes on
Example 6. George and Helen are
Medicare Tax for nonresident aliens and
your tax return, including any Additional
married and file jointly. George has $190,000
U.S. citizens living abroad. Wages, railroad
Medicare Tax. You cannot designate any
in wages and Helen has $150,000 in
retirement (RRTA) compensation, and
estimated payments specifically for
compensation subject to railroad retirement
self-employment income that are subject to
Additional Medicare Tax.
(RRTA) taxes. Neither George nor Helen has
Medicare tax will also be subject to
wages or compensation that exceed
If you intend to file a joint return for 2015
Additional Medicare Tax if in excess of the
$200,000. Therefore, their employers did not
and you anticipate that the combined wages
applicable threshold.
withhold Additional Medicare Tax. George
and self-employment income of you and your
and Helen do not combine their wages and
spouse are going to be more than $250,000,
Examples
railroad retirement (RRTA) compensation to
you may want to request additional
determine whether they are in excess of the
The following examples will assist you in
withholding on Form W-4 and/or make
$250,000 threshold for a joint return. George
understanding and figuring your Additional
estimated payments. If you are in a
and Helen are not liable to pay Additional
Medicare Tax.
community property state and plan to file as
Medicare Tax because George’s wages are
married filing separately, see Pub. 555,
Example 1. Ann, a single filer, has
not in excess of the $250,000 threshold and
Community Property, for more information on
$130,000 in self-employment income and $0
Helen’s railroad retirement (RRTA)
the treatment of withheld income taxes.
in wages. Ann is not liable to pay Additional
compensation is not in excess of the
Medicare Tax and does not need to file Form
$250,000 threshold.
In general, you do not have to make
8959 because her self-employment income
estimated tax payments if you expect that
Example 7. Ishmael and Judy are
is less than the $200,000 threshold for single
your 2015 return will show a tax refund or a
married and file jointly. Ishmael has
filers.
tax balance due of less than $1,000. If your
$160,000 in self-employment income and
Example 2. Bob, a single filer, has
total estimated tax for 2015 is $1,000 or
Judy has $140,000 in compensation subject
more, see Form 1040-ES (or Form 1040-ES
$220,000 in self-employment income and $0
to railroad retirement (RRTA) taxes. Judy's
in wages. Bob is liable to pay Additional
(NR) if a nonresident alien or Form 1040-ES
compensation did not exceed $200,000.
Medicare Tax on $20,000 ($220,000 in
(PR) if a resident of Puerto Rico) and Pub.
Therefore, Judy's employer did not withhold
505 for a worksheet you can use to see if you
self-employment income minus the threshold
Additional Medicare Tax. The $140,000 of
of $200,000). Bob must file Form 8959.
have to make estimated tax payments. For
railroad retirement (RRTA) compensation
more details, see Pub. 505.
does not reduce the threshold at which
Example 3. Carl, a single filer, has
Additional Medicare Tax applies to
$145,000 in self-employment income and
Estimated tax penalty. You may be
self-employment income. Ishmael and Judy
$130,000 in wages. Carl’s wages do not
subject to a penalty for failure to make
are not liable to pay Additional Medicare Tax
exceed $200,000. Therefore, Carl’s
estimated tax payments if you owe
because Ishmael's self-employment income
employer did not withhold Additional
Additional Medicare Tax and wait to pay the
is not in excess of the $250,000 threshold
Medicare Tax. However, the $130,000 of
tax with your tax return. See Form 2210,
and Judy’s railroad retirement (RRTA)
wages reduces the self-employment income
Underpayment of Estimated Tax by
compensation is not in excess of the
threshold to $70,000 ($200,000 threshold
Individuals, Estates and Trusts, and its
$250,000 threshold.
minus the $130,000 of wages). Carl is liable
separate instructions to determine if the
to pay Additional Medicare Tax on $75,000
penalty applies to you.
Income Tax Withholding
of self-employment income ($145,000 in
self-employment income minus the reduced
and Estimated Tax
Specific Instructions
threshold of $70,000). Carl must file Form
Payments for 2015
8959.
Name(s). Print or type your name (and your
Depending upon your filing status, wages,
Example 4. Don, who is married and
spouse's name if filing a joint return) exactly
railroad retirement (RRTA) compensation
files married filing separately, has $150,000
as it is entered on your return.
and self-employment income, you may owe
in self-employment income and $200,000 in
Social security number. The social
more than what was withheld by your
wages. Don’s wages do not exceed
security number on this form should match
employer. If you anticipate having a liability
$200,000. Therefore, Don’s employer did not
the social security number on your tax return.
for Additional Medicare Tax for 2015, you
withhold Additional Medicare Tax. However,
If you are married and filing a joint return,
may request that your employer withhold an
Don is liable to pay Additional Medicare Tax
enter the first social security number that
additional amount of income tax. You make
on $75,000 of wages ($200,000 in wages
appears on your return.
the request by filing a new Form W-4,
minus the $125,000 threshold for a married
Employee's Withholding Allowance
filing separately return). In addition, the
Certificate, with your employer. The
$200,000 of wages reduces the
additional income tax withholding will be
self-employment income threshold to $0
applied against the taxes shown on your tax
($125,000 threshold minus the $200,000 of
return, including any Additional Medicare
wages). Don is also liable to pay Additional
Tax liability. You cannot request additional
Medicare Tax on $150,000 of
Instructions for Form 8959 (2014)
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