What Is Medicare Tax Withheld?

What Is Medicare Tax Withheld?

In 2017, individuals earning more than $200,000 and married couples filing jointly earning more than $250,000 are subject to an additional 0.9 percent Medicare tax on the amount of wages that exceeds these thresholds. Employers are required to withhold the additional Medicare tax from wages that exceed $200,000 for single filers and $250,000 for married filers. The additional Medicare tax is only imposed on the employee. The employer is not liable for the additional Medicare tax.

Medicare taxes are reported on Form W-2, Wage and Tax Statement, in box 6.

There is no limit to the wages that are subject to Medicare tax. In this article, we'll talk about:

What is the Medicare tax rate for employees?

The Medicare tax rate is 2.9 percent of all wages. Employers and employees split the tax, however, with the employer only responsible for withholding and remitting the 0.9 percent difference to the IRS. The employee is responsible for the remaining 2.2 percent.

What is the Medicare tax rate for employers?

The Medicare tax rate for employers is 1.45 percent. The employer is responsible for withholding the entire 1.45 percent from employee wages.

How much Medicare tax is withheld from my paycheck?

In addition to the standard 6.2 percent social security tax, your employer may also withhold an additional 0.9 percent Medicare tax. The Medicare tax is only withheld from employee wages that exceed the $200,000 single filer threshold or the $250,000 married filer threshold. There is no limit on the amount of wages subject to Medicare taxes.

How can I calculate the amount of Medicare tax withheld from my paycheck?

Let's say that you're single and earn $130,000 from your job. How much of that income is subject to Medicare taxes?

You'll first need to know the FICA tax rates for 2017.

The Social Security tax rate is 6.2 percent (6.2% = 6.2 /100).

The Medicare tax rate is 2.9 percent (2.9% = 2.9 /100).

Here are the steps to follow:

Subtract your $130,000 salary from the $200,000 single filer threshold. The difference is $70,000. Multiply your $130,000 income by 0.9%. The result is $11,900. Add the results of steps 1 and 2. The total amount of Medicare taxes you'll owe is $11,900 + $6,200 = $18,100.

You'll notice that we're still missing a number in the equation. The 0.9 percent Medicare tax is withheld by the employer and not you.

You'll need to know the amount of wages subject to Medicare tax withholding to complete the calculation. The amount of wages subject to Medicare tax withholding is the total wages paid by the employer during the year minus any wages subject to social security tax withholding. Wages subject to Medicare tax withholding is in box 3 of your W-2.

Let's say that your employer paid you $125,000 in regular wages and $15,000 in overtime wages during the year.

The amount of wages subject to social security tax withholding is $125,000.

The amount of wages subject to Medicare tax withholding is the total amount of wages paid by the employer during the year minus the amount of wages subject to social security tax withholding, or $130,000 – $125,000 = $5,000.

Because the amount of wages subject to social security tax withholding is $125,000, the amount of wages subject to Medicare tax withholding is $5,000.

How can I calculate my total Medicare taxes?

Total Medicare taxes can be calculated by multiplying your wages by the Medicare tax rate of 2.9 percent. In addition to the Medicare tax, you'll also need to know the amount of wages subject to Medicare tax withholding. The amount of wages subject to Medicare tax withholding is in box 3 of your W-2.

Let's go back to our starting example.

You're single and earn $130,000 from your job.

The amount of wages subject to Medicare tax withholding is $156,000 – $130,000 = $26,000.

The total amount of Medicare taxes you'll owe is $130,000 x 2.9% = $3,390.

How do I calculate my social security and Medicare taxes on a 1099 form?

FICA taxes are calculated by multiplying your income by the social security tax rate of 6.2 percent and the Medicare tax rate of 2.9 percent. You'll need to know your W-2 amounts to complete the calculation.

Let's go back to our previous example. You're single and earn $130,000 from your job.

Your total social security and Medicare taxes are $3,390.

How can I estimate my total Medicare taxes?

You can estimate your total Medicare taxes by multiplying your income by the Medicare tax rate of 2.9 percent.

Let's say that you're single and earn $70,000 from your job.

Your total Medicare taxes are $2,240.

How do I calculate my self-employment tax?

Self-employment taxes are calculated by multiplying your net self-employment income by the self-employment tax rate of 15.3 percent. The self-employment tax rate consists of 12.4 percent for social security and 2.9 percent for Medicare.

Let's look at an example.

You're self-employed and earned $130,000 in 2017.

Your self-employment tax is $18,900.

How do I calculate the total federal income tax liability?

The total federal income tax liability is the sum of the individual income tax, social security tax, and Medicare taxes.

In 2017

LET'S GET STARTED

Get A Quote Now

Get a QuoteSpeak With a Licensed Agent Now*
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.