What is the additional Medicare tax withholding?

Pursuant to IRS Notice 1036: “In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employers Tax Guide.”

Changes to Caselle

Caselle has a new pay code type called Medicare Premium (version 4.2140 or higher). You will need to add the new pay code to Payroll to comply with IRS Notice 1036.

Directions

Download the PDF and follow the instructions to add the new Medicare pay code to Payroll.