Instructions For Form 8959 - Additional Medicare Tax - 2015 Page 2
ADVERTISEMENT
1
2
3
4regardless of wages or compensation paid
in self-employment income and $200,000 in
more than the amount that was withheld by
by another employer.
wages. Don’s wages don't exceed $200,000.
your employer. If you anticipate having a
Therefore, Don’s employer didn't withhold
liability for Additional Medicare Tax for 2016,
All railroad retirement (RRTA)
Additional Medicare Tax. However, Don is
you may request that your employer withhold
compensation that is currently subject to
liable for Additional Medicare Tax on
an additional amount of income tax. You
Medicare tax is subject to Additional
$75,000 of wages ($200,000 in wages minus
make the request by filing a new Form W-4,
Medicare Tax to the extent it exceeds the
the $125,000 threshold for a married filing
Employee's Withholding Allowance
threshold amount for your filing status. A
separately return). In addition, the $200,000
Certificate, with your employer. The
railroad employer must withhold Additional
of wages reduces the self-employment
additional income tax withholding will be
Medicare Tax on compensation it pays to
income threshold to $0 ($125,000 threshold
applied against the taxes shown on your tax
you in excess of $200,000 for the calendar
minus the $200,000 of wages). Don is also
return, including any Additional Medicare
year, regardless of your filing status and
liable for Additional Medicare Tax on
Tax liability. You can't request additional
regardless of wages or compensation paid
$150,000 of self-employment income
withholding specifically for Additional
by another employer.
($150,000 in self-employment income minus
Medicare Tax. For more information on tax
You can't ask your employer to stop
the reduced threshold of $0). Don must file
withholding, see Pub. 505.
Additional Medicare Tax withholding if it is
Form 8959.
To the extent Additional Medicare Tax
required to withhold it. If you don't owe
Example 5. Erin and Frank are married
Additional Medicare Tax, you can claim a
isn't withheld by your employer, you must
and file jointly. Erin has $150,000 in wages
pay the tax. If you anticipate that you will owe
credit for any withheld Additional Medicare
and Frank has $175,000 in wages. Neither
Additional Medicare Tax for 2016 but won't
Tax against the total tax liability shown on
Erin nor Frank has wages that exceed
your tax return by filing Form 8959.
satisfy the liability through withholding, you
$200,000. Therefore, their employers didn't
may need to make estimated tax payments.
If you have both wages and
withhold Additional Medicare Tax. However,
You should consider your estimated total tax
self-employment income, the threshold
their combined $325,000 in wages exceeds
liability in light of your wages, compensation,
amount for applying Additional Medicare Tax
the $250,000 threshold for joint filers. Erin
and self-employment income and the
on the self-employment income is reduced
and Frank are liable for Additional Medicare
threshold amount for your filing status when
(but not below zero) by the amount of wages
Tax on $75,000 of wages ($325,000 in
determining whether estimated tax payments
subject to Additional Medicare Tax. There is
wages minus the $250,000 threshold). Erin
are necessary. Any estimated tax payments
no equivalent rule for railroad retirement
and Frank must file Form 8959.
you make will apply to any and all taxes on
(RRTA) compensation. See Examples, next.
your tax return, including any Additional
Example 6. George and Helen are
There are no special rules for Additional
Medicare Tax. You can't designate any
married and file jointly. George has $190,000
Medicare Tax for nonresident aliens and
estimated payments specifically for
in wages and Helen has $150,000 in
U.S. citizens living abroad. Wages, railroad
Additional Medicare Tax.
compensation subject to railroad retirement
retirement (RRTA) compensation, and
(RRTA) taxes. Neither George nor Helen has
If you intend to file a joint return for 2016
self-employment income that are subject to
wages or compensation that exceed
and you anticipate that the combined wages
Medicare tax will also be subject to
$200,000. Therefore, their employers didn't
and self-employment income of you and your
Additional Medicare Tax if in excess of the
withhold Additional Medicare Tax. George
spouse are going to be more than $250,000,
applicable threshold.
and Helen don't combine their wages and
you may want to request additional
railroad retirement (RRTA) compensation to
Examples
withholding on Form W-4 and/or make
determine whether they are in excess of the
estimated payments. If you are in a
$250,000 threshold for a joint return. George
The following examples will assist you in
community property state and plan to file as
and Helen aren't liable for Additional
understanding and figuring your Additional
married filing separately, see Pub. 555 for
Medicare Tax because George’s wages
Medicare Tax.
more information on the treatment of
aren't in excess of the $250,000 threshold
Example 1. Ann, a single filer, has
withheld income taxes.
and Helen’s railroad retirement (RRTA)
$130,000 in self-employment income and $0
compensation isn't in excess of the $250,000
In general, you don't have to make
in wages. Ann isn't liable for Additional
threshold.
estimated tax payments if you expect that
Medicare Tax and doesn't need to file Form
Example 7. Ishmael and Judy are
your 2016 return will show a tax refund or a
8959 because her self-employment income
married and file jointly. Ishmael has
tax balance due of less than $1,000. If your
is less than the $200,000 threshold for single
$160,000 in self-employment income and
total estimated tax for 2016 is $1,000 or
filers.
Judy has $140,000 in compensation subject
more, see Form 1040-ES (or Form 1040-ES
Example 2. Bob, a single filer, has
to railroad retirement (RRTA) taxes. Judy's
(NR) if a nonresident alien or Form 1040-ES
$220,000 in self-employment income and $0
compensation didn't exceed $200,000.
(PR) if a resident of Puerto Rico) and Pub.
in wages. Bob is liable for Additional
Therefore, Judy's employer didn't withhold
505 for a worksheet you can use to see if you
Medicare Tax on $20,000 ($220,000 in
Additional Medicare Tax. The $140,000 of
have to make estimated tax payments. For
self-employment income minus the threshold
railroad retirement (RRTA) compensation
more details, see Pub. 505.
of $200,000). Bob must file Form 8959.
doesn't reduce the threshold at which
Estimated tax penalty. You may be
Additional Medicare Tax applies to
Example 3. Carl, a single filer, has
subject to a penalty for failure to make
self-employment income. Ishmael and Judy
$145,000 in self-employment income and
estimated tax payments if you owe
aren't liable for Additional Medicare Tax
$130,000 in wages. Carl’s wages don't
Additional Medicare Tax and wait to pay the
because Ishmael's self-employment income
exceed $200,000. Therefore, Carl’s
tax with your tax return. See Form 2210 (or
isn't in excess of the $250,000 threshold and
employer didn't withhold Additional Medicare
Form 2210-F for farmers and fisherman) and
Judy’s railroad retirement (RRTA)
Tax. However, the $130,000 of wages
its separate instructions to determine if the
compensation isn't in excess of the $250,000
reduces the self-employment income
penalty applies to you.
threshold.
threshold to $70,000 ($200,000 threshold
minus the $130,000 of wages). Carl is liable
Income Tax Withholding
Specific Instructions
for Additional Medicare Tax on $75,000 of
self-employment income ($145,000 in
and Estimated Tax
Name(s). Print or type your name (and your
self-employment income minus the reduced
Payments for 2016
spouse's name if filing a joint return) exactly
threshold of $70,000). Carl must file Form
as it is entered on your return.
8959.
Depending upon your filing status, wages,
railroad retirement (RRTA) compensation,
Example 4. Don, who is married and
Social security number. The social
and self-employment income, you may owe
files married filing separately, has $150,000
security number on this form should match
Instructions for Form 8959 (2015)
-2-
ADVERTISEMENT
0 votes
Related Articles
Related forms
Related Categories
Parent category: Financial