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An IRS payroll industry conference call that took place on June 7 shed some light on the higher Medicare tax rate that high wage earners will pay beginning in 2013. Among other issues, the call addressed how the tax will be reported and how certain employees may increase their withholding to avoid large liabilities at filing time.
Background. The 2010 Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) includes a provision that, effective for tax years beginning after 2012, imposes an additional 0.9% Medicare (health insurance, or HI) tax on taxpayers (other than corporations, estates, or trusts) receiving wages with respect to employment in excess of $200,000 ($250,000 for married couples filing jointly and $125,000 for married couples filing separately). (Code Sec. 3101(b)(2)) These amounts aren't indexed for inflation.