Our partners at UBA have helped to provide you with what employers need to know right now about Health Care Reform:
HIGHLIGHTS OF ADDITIONAL MEDICARE WITHHOLDING FOR HIGH EARNERS
- Effective Jan. 1, 2013
- Applies to all employers
- Must withhold an additional 0.9
percent of the employee's share for Medicare/HI (from 1.45 percent to 2.35
percent) once the employee's wages exceed $200,000
- Employer does not match this
additional 0.9 percent
- Additional 0.9 percent is not
capped
- Additional withholding only
applies to wages over $200,000, beginning in the pay period the $200,000
threshold is met
- Additional amount will be
reported with other Medicare withholding in Box 6 of the W-2
- Employee's tax obligation is
not synchronized with the withholding requirement
- Employee owes the extra 0.9%
on wages and other compensation over $200,000 if single, $250,000 if
married and filing jointly, and $125,000 if married and filing single -
employer simply withholds on wages in excess of $200,000 regardless of
employee's situation
- No obligation to notify high
earners of additional withholding
- Similar requirement applies to
self-employed once their income exceeds $200,000
- Verify payroll system/payroll
vendor is prepared to withhold the additional tax as needed beginning
January 2013
- Consider advising affected
employees that:
- Additional withholding will
occur
- Withholding is a rough
estimate of the actual household tax obligation, and they should review
their circumstances, including estimated tax payments, and plan
accordingly
*This information is general and is provided for educational purposes only. It reflects UBA's understanding of the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice. You should not act on this information without consulting legal counsel or other knowledgeable advisors.