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IRS Releases Additional Medicare Tax Guidance
Under the Patient Protection and Affordable Care Act signed into law in 2010, the Medicare rate will increase from the current rate of 1.45% to a rate of 2.35% on wages paid starting Jan 1, 2013 for individuals whose income meets pre-defined thresholds.
The IRS has announced that all employers are to withhold Medicare at the rate of 2.35% on all wages paid to an employee in excess of $200,000 in a calendar year, regardless of marital status. This rate increase only affects employee withholding and does not affect the employer contribution rate which stands at 1.45%.
The IRS has also issued guidance for employers and payroll service providers. Also included is guidance for employees who will be subject to the increased Medicare taxes when combining income with their spouse.
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