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Free IRS Additional Medicare Tax Form 8959 Instructions-2025

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The document provides instructions for Form 8959, which is used to calculate the Additional Medicare Tax owed by individuals based on their Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income that exceed specified threshold amounts. It outlines the filing requirements, thresholds for different filing statuses, and details on how to report and reconcile the tax withheld by employers. The document also includes examples to illustrate how to determine liability for the Additional Medicare Tax.

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How to reduce additional Medicare tax?

1. Retirement Contributions. As mentioned earlier, contributions to a Traditional IRA or 401(k) reduce your taxable income, which can lower the amount of Medicare tax you owe. However, this reduction primarily benefits those who are just over the threshold for the additional 0.9% Medicare tax.

Can I opt out of paying Medicare tax?

Can you Opt Out of Medicare Tax? While regular taxpayers may not opt out, there are certain religious groups which may qualify and be exempt from paying Social Security taxes. The qualifications for this are: Waive rights to all Social Security benefits including hospital care.

How do you calculate the additional Medicare tax?

What is the additional Medicare tax for 2025? The additional Medicare tax of 0.9% applies only to higher wage earners. It is paid in addition to the standard Medicare tax. An employee will pay 1.45% standard Medicare tax, plus the 0.9% additional Medicare tax, for a total of 2.35% of their income.

How do I avoid paying 3.8% Medicare surtax?

Look for ways to minimize your AGI. The lower your AGI (the number at the bottom of the TAX-FORM 1040) the lower the amount of your income will be subject to the 3.8% surtax. Need another reason to contribute to your retirement plan? Making contributions to your 401k, 403b or pension will lower your AGI.

Why am I having to pay additional Medicare tax?

Additional Medicare tax applies to an individuals Medicare wages that exceed a threshold amount based on the taxpayers filing status. Employers are responsible for withholding the 0.9% Additional Medicare tax on an individuals wages paid in excess of $200000 in a calendar year, without regard to filing status.

Why am I being charged additional Medicare tax?

A 0.9% Additional Medicare tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation that exceed the following threshold amounts based on filing status: $250,000 for married filing jointly; $125,000 for married filing separately; and. $200,000 for all other taxpayers.

What is the additional Medicare tax on Form 8959?

If you are filing Form 8959, you must file one of the forms listed earlier. Additional Medicare Tax. A 0.9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount.

Free IRS Additional Medicare Tax Form 8959 Instructions-2025

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