Question

ax Drill - Medicare Taxes Assessed on High-Income Individuals

Compute the additionalMedicare tax for the following taxpayers. If required, round your answers to the nearest dollar.

a. Mario, who is single, earns wages of $440,000 in 2019.
His additional Medicare tax is $._______________

b. George and Shirley are married and file a joint return in 2019. During the year, George earns wages of $138,000, and Shirley earns wages of $210,000.
Their additional Medicare tax is $ _______________

c. Simon has net investment income of $38,000 and MAGI of $223,000 and files as a single taxpayer.
Simon's additional Medicare tax is $.______874______

Answer 1

ANSWER

(A) Additional Medicare Tax = $2,160

Earns Wages = $440,000

The additional Medicare tax is 0.9% on wages above $200,000 for single taxpayer

So Additional medicare tax = ($440,000 - $200,000) x 0.9% = $2,160

(B) Additional Medicare Tax = $882

The additional Medicare tax is 0.9% on wages above $250,000 for married and file jointly taxpayer

George earns wages = $138,000

Shirley earns wages = $210,000

Total earns wages = $348,000

So Additional medicare tax = ($348,000 - $250,000) x 0.9% = $882

(C)

Simon is an individual having MAGI of $223,000 of these $185,000 on on wages income and $38000 is of income on investment and his MAGI is below the threshold limit of $200,000, On Net investment income 3,8% tax rate is applied.

So additional Medicare tax is ($38,000-$15,000)*3.8% = $874.

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