Medicare Tax Increase
 

Just a heads up to all you folks that have a working spouse and file taxes jointly. Beginning this year the Medicare Tax on all earned income over 250K for married couples filing jointly will 2.35%. This could be a problem if either one of you gets close to the limit but does not exceed it. Your employer will not withhold the additonal .9% until you actually exceed the limit. For example, if you earn 230K and the spouse earns 120K, neither one of you will have the extra .9% taken out of your check. However, when it comes tax time, you will owe the additional .9% on the 100K. Couple that with the 3.8% surtax on net investment income for MAGI over 250K, and you could get in to penalties for under witholding for taxes. You may want to file another W-4 to adjust your withholding.

Time to get divorced...

Actually, employers are supposed to start withholding the additional Medicare tax when you go over $200,000. And, if you don't exceed the threshold(depending on your filing status)...You will claim it as a credit when you file your tax return.

And, the 3.8% surtax is on either MAGI over $250,000 or net investment income, whichever is less.

But, it is something to look at.

I may have misread the article, but I think your employer will start withholding the extra .9% on anything above 200K for single and above 250K for married filing joint status. Got my information from Kiplingers. Might bear looking in to. Any of you rich widebody guys hit 200K for the year yet and see .9% increase in Medicare Tax?

It all sounds like chump "change".

The employer doesn't know what filing status you're going to file. So, to make it simple(?), they required them to start at $200,000, regardless.

Quick search of the IRS website confirms what you said. So, anything over 200K will have an addtional .9% Medicare Tax taken out. May be a way to bump up your refund; also known as a free loan to the IRS.

Divorced? Where do I find a job for my wife that makes $100K+!

That'll cost you more than .9% ;)

How will my employer know if I'm filing married joint status?