Instructions For Form 8959 - Additional Medicare Tax

required to withhold it. If you do not owe

Example 5. Erin and Frank are married

You should consider your estimated total tax

Additional Medicare Tax, you can claim a

and file jointly. Erin has $150,000 in wages

liability in light of your wages, compensation,

credit for any withheld Additional Medicare

and Frank has $175,000 in wages. Neither

and self-employment income and the

Tax against the total tax liability shown on

Erin nor Frank has wages that exceed

threshold amount for your filing status when

your tax return by filing Form 8959.

$200,000. Therefore, their employers did not

determining whether estimated tax payments

withhold Additional Medicare Tax. However,

are necessary. Any estimated tax payments

If you have both wages and

their combined $325,000 in wages exceeds

you make will apply to any and all taxes on

self-employment income, the threshold

the $250,000 threshold for joint filers. Erin

your tax return, including any Additional

amount for applying Additional Medicare Tax

and Frank are liable to pay Additional

Medicare Tax. You cannot designate any

on the self-employment income is reduced

Medicare Tax on $75,000 of wages

estimated payments specifically for

(but not below zero) by the amount of wages

($325,000 in wages minus the $250,000

Additional Medicare Tax.

subject to Additional Medicare Tax. There is

threshold). Erin and Frank must file Form

If you intend to file a joint return for 2014

no equivalent rule for railroad retirement

8959.

and you anticipate that the combined wages

(RRTA) compensation. See

Examples

next.

Example 6. George and Helen are

and self-employment income of you and your

married and file jointly. George has $190,000

If you are a nonresident alien or a U.S.

spouse are going to be more than $250,000,

in wages and Helen has $150,000 in

citizen living abroad, you are required to pay

you may want to request additional

compensation subject to railroad retirement

Additional Medicare Tax on Medicare

withholding on Form W-4 and/or make

(RRTA) taxes. George and Helen do not

wages, railroad retirement (RRTA)

estimated payments. If you are in a

combine their wages and railroad retirement

compensation, and self-employment income

community property state and plan to file as

(RRTA) compensation to determine whether

that exceed the threshold amount for your

married filing separately, see Pub. 555 for

they are in excess of the $250,000 threshold

filing status, without regard to your domicile

more information on the treatment of

for a joint return. George and Helen are not

or citizenship.

withheld income taxes.

liable to pay Additional Medicare Tax

In general, you do not have to make

Examples

because George’s wages are not in excess

estimated tax payments if you expect that

of the $250,000 threshold and Helen’s

The following examples will assist you in

your 2014 return will show a tax refund or a

railroad retirement (RRTA) compensation is

understanding and figuring your Additional

tax balance due of less than $1,000. If your

not in excess of the $250,000 threshold.

Medicare Tax.

total estimated tax for 2014 is $1,000 or

Example 7. Ishmael and Judy are

more, see Form 1040-ES (or Form 1040-ES

Example 1. Ann, a single filer, has

married and file jointly. Ishmael has

(PR) if a resident of Puerto Rico) and Pub.

$130,000 in self-employment income and $0

$160,000 in self-employment income and

505 for a worksheet you can use to see if you

in wages. Ann is not liable to pay Additional

Judy has $140,000 in compensation subject

have to make estimated tax payments. For

Medicare Tax and does not need to file Form

to railroad retirement (RRTA) taxes. The

more details, see Pub. 505.

8959 because her self-employment income

$140,000 of railroad retirement (RRTA)

is less than the $200,000 threshold for single

Estimated tax penalty. You may be

compensation does not reduce the threshold

filers.

subject to a penalty for failure to make

at which Additional Medicare Tax applies to

estimated tax payments if you owe

self-employment income. Ishmael and Judy

Example 2. Bob, a single filer, has

Additional Medicare Tax and wait to pay the

are not liable to pay Additional Medicare Tax

$220,000 in self-employment income and $0

tax with your tax return. See Form 2210,

because Ishmael's self-employment income

in wages. Bob is liable to pay Additional

Underpayment of Estimated Tax by

is not in excess of the $250,000 threshold

Medicare Tax on $20,000 ($220,000 in

Individuals, Estates and Trusts, and its

and Judy’s railroad retirement (RRTA)

self-employment income minus the threshold

separate instructions to determine if the

compensation is not in excess of the

of $200,000). Bob must file Form 8959.

penalty applies to you.

$250,000 threshold.

Example 3. Carl, a single filer, has

$145,000 in self-employment income and

Income Tax Withholding

Specific Instructions

$130,000 in wages. Carl’s wages do not

and Estimated Tax

exceed $200,000. Therefore, Carl’s

Name(s). Print or type your name (and your

employer did not withhold Additional

Payments for 2014

spouse's name if filing a joint return) exactly

Medicare Tax. However, the $130,000 of

as it is entered on your return.

Depending upon your filing status, wages,

wages reduces the self-employment income

railroad retirement (RRTA) compensation

threshold to $70,000 ($200,000 threshold

Social security number. The social

and self-employment income, you may owe

minus the $130,000 of wages). Carl is liable

security number on this form should match

more than what was withheld by your

to pay Additional Medicare Tax on $75,000

the social security number on your tax return.

employer. If you anticipate having a liability

of self-employment income ($145,000 in

If you are married and filing a joint return,

for Additional Medicare Tax for 2014, you

self-employment income minus the reduced

enter the first social security number that

may request that your employer withhold an

threshold of $70,000). Carl must file Form

appears on your return.

additional amount of income tax. You make

8959.

the request by filing a new Form W-4,

Part I—Additional

Example 4. Don, who is married and

Employee's Withholding Allowance

files married filing separately, has $150,000

Medicare Tax on Medicare

Certificate, with your employer. The

in self-employment income and $200,000 in

additional income tax withholding will be

Wages

wages. Don’s wages do not exceed

applied against the taxes shown on your tax

$200,000. Therefore, Don’s employer did not

If you (and your spouse if filing a joint return)

return, including any Additional Medicare

withhold Additional Medicare Tax. However,

did not have Medicare wages, skip Part I and

Tax liability. You cannot request additional

the $200,000 of wages reduces the

go to Part II.

withholding specifically for Additional

self-employment income threshold to $0

Medicare Tax. For more information on tax

Line 1

($125,000 threshold minus the $200,000 of

withholding, see Pub. 505, Tax Withholding

wages). Don is liable to pay Additional

Enter the total of your Medicare wages and

and Estimated Tax.

Medicare Tax on $75,000 of wages

tips from box 5 of your Form W-2. If you have

($200,000 in wages minus the $125,000

To the extent Additional Medicare Tax is

more than one Form W-2, enter the total of

threshold for a married filing separately

not withheld by your employer, you must pay

the amounts from box 5. If you are filing a

return) and on $150,000 of self-employment

the tax. If you anticipate that you will owe

joint return, also include your spouse’s

income ($150,000 in self-employment

Additional Medicare Tax for 2014 but will not

wages and tips.

income minus the reduced threshold of $0).

satisfy the liability through withholding, you

Don must file Form 8959.

may need to make estimated tax payments.

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Instructions For Form 8959 - Additional Medicare Tax - 2013 Page 2

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