For tax year 2020, for example, if you are married and filing jointly, the tax only applies to income that exceeds $250,000 in combined earnings. On the other hand, if you were married filing separately, you could end up owing more tax, because the threshold is only $125,000.
Working through Form 8959
Form 8959 consists of three parts. Each part includes a short calculation to figure out how much Additional Medicare Tax you owe, if any. You complete only the part of the form that applies to the type of income you received.
- Fill out Part I if you received W-2 income.
- Fill out Part II if you received self-employment income.
- Fill out Part III if you received RRTA
If you had more than one type of income, such as W-2 income and self-employment income, you will have to complete all sections that apply. Once you complete Form 8959 and figure out the total Additional Medicare Tax you're responsible for, the final section of the form subtracts the tax you paid through withholding and estimated tax payments to determine if there is any Additional Medicare Tax due—which ultimately gets reported on your 1040 form.
Remember, TurboTax will handle all of these calculations and fill in all the right forms for you.
Adjustments for future years
If you paid too much based on your filing status, your employer cannot stop withholding your Additional Medicare Tax. However, overpayments are applied against the tax owed on your annual income tax filing and could lead to a tax refund.
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