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0.9% added payroll tax
A provision in the Affordable Care Act calls for an additional 0.9% Medicare payroll tax on wage income over certain thresholds. This is on top of the 1.45% Medicare tax for which taxes already are withheld.
Employers must withhold the added tax when a single taxpayer's income exceeds $200,000. This income level also applies to head of household and qualifying widow/widower taxpayers.
Married taxpayers who file joint returns face the added tax when their combined income exceeds $250,000. The income limit is $125,000 if married filing separately.
The added Medicare tax also applies to self-employment earnings. And the earnings thresholds are not indexed for inflation, so more individuals could face the tax as their incomes increase over the years.
You can't have extra tax withheld specifically for the 0.9% levy. However, any excess income tax you have withheld applies to any taxes -- including the new Medicare portion -- you owe on your Form 1040. Estimated tax payments also can help cover the new tax.
Conversely, if your employer withheld the added tax because you made more than $200,000 but your combined income with your spouse does not meet the $250,000 joint filing threshold, you'll claim credit for any excess Medicare tax when you file your return.
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