What Is Medicare Surtax?

What Is Medicare Surtax?

Medicare surtax is a tax that some people have to pay on their earned income. Earned income is income you get from working. Medicare surtax is only applied to certain types of income.

What is Medicare surtax?

What is earned income?

Earned income is income you get from working. Earned income includes but is not limited to wages, salaries, tips, and taxable scholarship and fellowship grants.

What is unearned income?

Unearned income is income you get from sources such as interest on bonds, dividend payments, or rent from property you own.

What types of income are exempt from the Medicare surtax?

If you are under age 65, wages, salaries, tips, and taxable scholarship and fellowship grants you receive are exempt from the Medicare surtax.

If you are age 65 or older, wages, salaries, tips, and taxable scholarship and fellowship grants you receive are subject to the Medicare surtax.

What types of income are subject to the Medicare surtax?

If you are under age 65, interest, dividends, net rental income, capital gains, and most private or public pensions are subject to the Medicare surtax.

If you are age 65 or older, interest, dividends, capital gains, and most private or public pensions are subject to the Medicare surtax.

What is the Medicare surtax rate?

If you are under age 65, the Medicare surtax rate is 3.8%.

If you are age 65 or older, the Medicare surtax rate is 3.8%.

How do I figure the Medicare surtax?

Step 1: Add the total of all your earned income for the year. If you have any exempt wages, salaries, tips, or taxable scholarship and fellowship grants, subtract the amount of these exempt amounts from your total earned income.

Step 2: Multiply the amount from Step 1 by the tax rate of 3.8% to get the Medicare surtax.

Step 3: Subtract the amount from Step 2 from the amount of your total income after subtracting any exempt wages, salaries, tips, or taxable scholarship and fellowship grants.

How do I figure the Medicare surtax on my tax return?

You figure the Medicare surtax by completing Form 8959 with your return. You do not have to file Form 8959 unless you have to pay Medicare surtax.

If you did not have any income that is subject to the Medicare surtax, you do not have to file Form 8959.

If you do not file Form 8959 with your tax return, your right to claim a refund of the Medicare surtax will be lost.

What are the Medicare surtax thresholds?

Your employer should withhold Medicare surtax from your pay if the amount of your wages, salaries, tips, and taxable scholarship and fellowship grants is $200,000 or more.

Your employer should not withhold Medicare surtax from your pay if the amount of your wages, salaries, tips, and taxable scholarship and fellowship grants is less than $200,000.

If you are self-employed, you should figure your Medicare surtax using the worksheet in the Form 8959 instructions.

If you figure your own taxes, you should figure your Medicare surtax using the worksheet in the Form 8959 instructions.

When should I use Form 8959 to figure Medicare surtax?

You may use Form 8959 to figure your Medicare surtax if you have to pay Medicare surtax.

You may not have to pay Medicare surtax. You should not use Form 8959 to figure your Medicare surtax if you have any of the following:

Zero or less total taxable income;

Zero or less unearned income;

Zero or less net capital gain; or

Zero or less qualified dividends.

You should only complete Form 8959 if you have to pay the Medicare surtax.

How do I claim a refund of the Medicare surtax?

If you paid the Medicare surtax on your Form 1040, you do not claim any of the Medicare surtax as a deduction or credit on Form 1040, and you do not claim a refund of the Medicare surtax on Form 1040.

If you paid the Medicare surtax on your Form 1040A, you do not claim any of the Medicare surtax as a deduction or credit on Form 1040A, and you do not claim a refund of the Medicare surtax on Form 1040A.

If you paid the Medicare surtax on your Form 1040EZ, you do not claim any of the Medicare surtax as a deduction or credit on Form 1040EZ, and you do not claim a refund of the Medicare surtax on Form 1040EZ.

If you paid the Medicare surtax on your Form 1040NR or Form 1040NR-EZ, you do not claim any of the Medicare surtax as a deduction or credit on Form 1040NR or 1040NR-EZ, and you do not claim a refund of the Medicare surtax on Form 1040NR or Form 1040NR-EZ.

If you paid the Medicare surtax on your Form 1040-SS or Form 1040-PR, you do not claim any of the Medicare surtax as a deduction or credit on Form 1040-SS or Form 1040-PR, and you do not claim a refund of the Medicare surtax on Form 1040-SS or Form 1040-PR.

If you paid the Medicare surtax on Form 1040-C, you do not claim any of the Medicare surtax as a deduction or credit on Form 1040-C, and you do not claim a refund

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