What Is Tax Form 8959? (Question)

Use Form 8959 to figure the amount of Additional Medicare Tax you owe and the amount of Additional Medicare Tax withheld by your employer, if any.

Do I need to file Form 8959?

You must file Form 8959 if one or more of the following applies to you. Your Medicare wages include your wages and tips from Form W-2, box 5; your tips from Form 4137, line 6; and your wages from Form 8919, line 6. Your self-employment income includes amounts from Schedule SE, Part I, line 6.

Why do I owe additional Medicare tax?

An individual will owe Additional Medicare Tax on wages, compensation and self-employment income (and that of the individual’s spouse if married filing jointly) that exceed the applicable threshold for the individual’s filing status. A self-employment loss is not considered for purposes of this tax.

Who is subject to the additional Medicare tax?

What Is the Additional Medicare Tax? The Additional Medicare Tax has been in effect since 2013. Taxpayers who make over $200,000 as individuals or $250,000 for married couples are subject to an additional 0.9 percent tax on Medicare. The Additional Medicare Tax goes toward funding features of the Affordable Care Act.

What is the purpose of Form 8958?

Use Form 8958 to determine the allocation of tax amounts between married filing separate spouses or registered domestic partners (RDPs) with community property rights. If you need more room, attach a statement listing the source of the item and the total plus the allocated amounts.

Who needs to fill out Form 8959?

The tax applies to wages from employment, self-employment income and railroad retirement income, but if you are receiving W-2 income, the tax will most likely be withheld from your wages. Either way, anyone subject to the tax is required to file Form 8959 with their annual income tax filing.

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What income is subject to the 3.8 Medicare tax?

How does the 3.8% Medicare surtax work? Who is affected by the tax? Individual taxpayers with more than $200,000 in modified adjusted gross income (MAGI) or couples with more than $250,000 in MAGI. For trusts and estates, the income threshold is $13,050.

How do I avoid additional Medicare tax?

To avoid paying the extra net investment income tax and additional medicare tax, your goal should be to earn less than $200,000 as an individual or $250,000 as a couple. One of the best ways to be more flexible with your income is to start and operate a business.

What is the 2021 Social Security limit?

In 2021, the Social Security tax limit is $142,800, and in 2022, this amount is $147,000.

What is the additional Medicare tax for 2020?

The Additional Medicare Tax rate is 0.9 percent. Income Subject to Tax. The tax applies to the amount of certain income that is more than a threshold amount.

What is the additional Medicare tax for 2021?

For 2021, an employee will pay: 6.2% Social Security tax on the first $142,800 of wages (maximum tax is $8,853.60 [6.2% of $142,800]), plus. 1.45% Medicare tax on the first $200,000 of wages ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return), plus.

What is additional tax?

Additional Tax means an additional federal income tax on certain Non-Qualified Distributions.

Is additional Medicare tax paid by employer?

An employer is responsible for withholding the Additional Medicare Tax from wages or railroad retirement (RRTA) compensation it pays to an employee in excess of $200,000 in a calendar year, without regard to filing status. There’s no employer match for Additional Medicare Tax.

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Does form 8958 affect taxes?

Form 8958 essentially reconciles the difference between what employers (and other income sources) have reported to the IRS and what the spouses will be reporting on their federal tax returns. Both spouses must include a copy of the form with their tax return.

Do I have to complete form 8958?

If the filing status on a return is married filing separately and the taxpayer lives in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, Wisconsin), Form 8958 must be completed and filed with the return.

When filing married separately Do you need spouse information?

When couples file separately, the IRS requires taxpayers to include their spouse’s information on their returns. According to the IRS, if you and your spouse file separate returns and one of you itemizes deductions, then the other spouse will have a standard deduction of zero.

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