Additional Medicare Tax User Guide for QuickBooks

With the new Medicare, Affordable Care Act, beginning tax year 2013 a new additional Medicare Tax of 0.9 percent applies to the individuals’ Medicare taxable wages, compensation or self-employment income that exceeds certain threshold amounts based on their filing status.

How does that impact you?

Beginning January 1, 2013, employers are responsible for withholding the Additional Medicare Tax from Medicare taxable wages and compensation paid to an employee in excess of $200,000 in a calendar year. In December 2012, Intuit released a new Payroll Update (21301) that included support for a new payroll tax item, Medicare Employee Addl Tax. If you pay wages in 2013 or later to employees who are subject to Medicare tax (regardless of whether you think you will ever pay any of them over $200,000), you must set up this new payroll tax item. This lets QuickBooks handle tracking, calculating, withholding, and reporting the Additional Medicare Tax appropriately and automatically so you don’t have to worry about if or when to apply it!

So what do you need to do?

Setting up the new payroll tax item, Medicare Employee Addl Tax, is simple and should be done before you create any paychecks in 2013!

1. Be sure you’ve downloaded the latest Payroll Update (21304 or later for the payroll tax item; 21308 or later for Form 941).
2. Open Payroll Setup and then close it in order to automatically set up the new Medicare Employee Addl Tax payroll tax item and attach it to the employee records of existing employees who are subject to Medicare.
3. Set up employee defaults so that the Medicare Employee Addl Tax payroll tax item is automatically attached when you add new employees who are subject to Medicare.

Once you set up the payroll tax item, QuickBooks reports the Additional Medicare Tax on2013 Form 941 and will report on Forms 944, 943, and W-2 if the IRS requires reporting on those forms.

Got a QuickBooks Mess? Call The QuickBooksGal at 775-348-9225


  1. I need your help! I have an employee that is at $308,000 YTD. He just consulted with his CPA and was told that an employee filing as "Married Filing Jointly" is supposed to start paying the .9% at $250,000 as opposed to $200,000. We calculated that QB has charged him the additional tax starting at $200K even though his employee file is marked as "Married". How can I fix this or have you heard if QuickBooks is working on a fix?


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