Employers withhold an additional medical care tax from wages in excess of $200,000 at what rate?

Employers withhold an additional medical care tax from wages in excess of $200,000 at what rate?

• A. 0.5%
• B. 0.75%
• C. 0.9%
• D. 1.2%

Answer: (C)

The additional Medicare tax applies to employees' wages exceeding $200,000 at a rate of 0.9%. This tax is specific to higher earners and is intended to help fund Medicare. The threshold of $200,000 is the point at which this additional withholding begins; it does not consider the employee's filing status or other income sources, meaning that it applies to all employees uniformly once their wages surpass this level. For employers, it's critical to note that they are not responsible for matching this additional tax; only the employee pays the additional 0.9% on earnings above the threshold. This aspect underscores the importance of accurate payroll calculations and understanding tax obligations, especially as it relates to withholding for employees earning higher incomes.

The additional Medicare tax applies to employees' wages exceeding $200,000 at a rate of 0.9%. This tax is specific to higher earners and is intended to help fund Medicare. The threshold of $200,000 is the point at which this additional withholding begins; it does not consider the employee's filing status or other income sources, meaning that it applies to all employees uniformly once their wages surpass this level.

For employers, it's critical to note that they are not responsible for matching this additional tax; only the employee pays the additional 0.9% on earnings above the threshold. This aspect underscores the importance of accurate payroll calculations and understanding tax obligations, especially as it relates to withholding for employees earning higher incomes.