What Is The Medicare Tax Rate For 2019?
The Medicare tax rate for 2019 is 2.95%.
The Medicare tax rate is the same for both employees and employers (except for Railroad Retirement Tax Act [RRTA] employees).
Additional Medicare Tax is imposed on employees and withheld by your employer. Its rate is 0.9% and is not limited to the income of the employee.
The Additional Medicare Tax applies to the employee's compensation above a threshold amount based on the employee's filing status. The threshold amount is:
$200,000 if married filing jointly or qualifying widow(er)
$125,000 if married filing separately
$200,000 if filing as a single or head of household
$125,000 if filing as a head of household
$200,000 if married filing separately by spouse
The threshold amount is doubled for married taxpayers filing a joint return who both have wages and self-employment income.
Frequently asked questions
What is the tax rate for the Additional Medicare Tax?
The tax rate for the Additional Medicare Tax is 0.9%.
Where do I report the Additional Medicare Tax?
Employers report the total employee Medicare Tax withheld, including Additional Medicare Tax and the regular Medicare tax, on Form W-2, Wage and Tax Statement.
Employees report their Additional Medicare Tax withheld on Form 1040, U.S. Individual Income Tax Return.
Employees report their Additional Medicare Tax on Form 8959, Additional Medicare Tax, and attach it to Form 1040.
How does the Additional Medicare Tax apply to tips?
Employee wages and tips are subject to social security and Medicare taxes under Federal Insurance Contributions Act (FICA).
Under FICA, all wages are subject to the Medicare tax of 1.45%, and only the employee is liable for payment of the Medicare tax.
Employers must withhold the employee's share of the social security tax, but not the employee's share of the Medicare tax.
Employers are not permitted to withhold the Additional Medicare Tax from the employee's wages or tips.
The employee is responsible for reporting the Additional Medicare Tax on his or her individual income tax return and for paying the tax.
What are the thresholds for the Additional Medicare Tax?
The Additional Medicare Tax threshold is:
What are some examples of common tax savings strategies employees can use to reduce their taxes?
The following strategies may reduce the amount of tax that you pay. However, you should always consult a tax professional before engaging in these or any other type of tax planning.
Making contributions to a 401(k) plan
Making contributions to a 403(b) plan
Making contributions to a traditional or Roth IRA
Making voluntary salary deferrals to a Section 125 cafeteria plan
What is a cafeteria plan?
A cafeteria plan is a tax-deferred annuity plan that allows employees to choose from a list of benefits. It is commonly set up at large companies to allow employees to choose from a list of benefits presented to them in the form of a cafeteria plan.
Contributions made to a cafeteria plan are not subject to payroll or Federal Insurance Contributions Act (FICA) taxes.
An employee is not taxed on the employer's contributions to the plan, but an employee is taxed on income received from the plan.
The plan can be an “open or closed” plan, which means that once the employee chooses the benefit (i.e., elects to contribute to a 401(k) plan or make a voluntary salary deferral to a Section 125 plan), it is not changed unless the employee makes a change to the benefit.
Employees who are 50 or older may also make catch-up contributions to their 401(k) plans and traditional or Roth IRAs.
There are limits on the amount that the employee can contribute to a 401(k) plan, a 403(b) plan, a traditional or Roth IRA, and a Section 125 plan.
Can I contribute to a Traditional IRA and a Roth IRA?
An employee may contribute to a traditional IRA and a Roth IRA as long as the combined contribution does not exceed the limits on the contribution.
The combined maximum contribution for both is $5,500, or $6,500 for employees who are age 50 and older.
How does the Affordable Care Act (ACA) affect my tax withholding?
The ACA requires employees who do not have health insurance coverage from their employer or an eligible spouse's employer to make a shared responsibility payment to the Internal Revenue Service (IRS).
Employers are responsible for withholding the payment from an employee's wages and sending it to the IRS. If an employee has a gap in health care coverage of three months or more during the year, the employer is required to send a written notice to the employee requiring the employee to report to the IRS that he or she is exempt from the shared responsibility payment.
What is the tax rate for the ACA?
The tax rate for the ACA is 0.9%.
What is the tax filing deadline for employees?
The deadline to