What to Expect: Additional Medicare Tax is Finalized for High Wage Earners

Here at Pilkington Financial Services we keep our clients abreast to the latest changes in federal healthcare reform. The latest news from the White House is that the Additional Medicare Tax has been finalized. By noting the final regulations regarding this tax, you can better prepare for the upcoming tax year. These changes are going to affect high wage earners most of all.

The final regulations were effective starting November 29, 2013. According to these new regulations, if an employee earns more than $200,000 annually, the employer must withhold 0.9 percent in the Additional Medicare Tax. This change will effect the adjustment of overpayments and underpayments as reported when filing taxes. For instance, if an employer over-collects in Additional Medicare Tax, the employee can only be compensated within the calendar year in which the collection occurred.

Also, the employer can claim the over-collection only if they did not withhold the amount from the employee’s wages. Employers who fail to deduct the correct amount will be held liable for that amount from their own coffers. Therefore it is essential to make sure that the correct amount is taken from high wage earners on the onset. For more information regarding the latest review of the Additional Medicare Tax and other coverage issues in Colorado, please contact Pilkington Financial Services of Sterling, CO.