Final answer:
The taxpayer with wages and self-employment income totaling $330,000 owes Additional Medicare Tax on $130,000 of it. At a rate of 0.9%, the total Additional Medicare Tax due is $1,170.
Step-by-step explanation:
Calculating Additional Medicare Tax
In this scenario, a taxpayer with $150,000 in wages and $180,000 in net self-employment income is looking to determine the amount of Additional Medicare Tax that would need to be paid on their Form 1040 for the year.
The Additional Medicare Tax applies to those whose income exceeds a certain threshold which, for a single filer, is $200,000. Since both wage and self-employment income are combined to determine the threshold for Additional Medicare Tax, we add both amounts to get a total of $330,000 for our taxpayer. The amount of income that is subject to the Additional Medicare Tax is therefore $330,000 - $200,000 = $130,000. The Additional Medicare Tax rate is 0.9%. Therefore, the Additional Medicare Tax due is 0.9% of $130,000, which equals $1,170.