Question

A husband and wife who earned Box 5 Medicare wages $175K and $125K respectively. Determine the amount of withholding for the Add. Medicare Tax that they would owe on their final Form 1040.

Answer 1

The husband and wife would owe $2,250 in withholding for the additional Medicare tax on their final Form 1040.

Step-by-step explanation:

The husband and wife both earned Medicare wages, so they would be responsible for paying the additional Medicare tax. The additional Medicare tax rate is 0.9% and it applies to individuals with earnings above certain thresholds. The threshold for married couples filing jointly is $250,000. Therefore, the husband and wife would owe the additional Medicare tax on the portion of their combined earnings that exceeds $250,000.

In this case, the combined earnings of the husband and wife is $175,000 + $125,000 = $300,000. Since this is above the threshold, the additional Medicare tax would apply. The amount of additional Medicare tax owed would be 0.9% of the amount that exceeds $250,000. Therefore, the amount of additional Medicare tax owed would be 0.9% of $300,000 - $250,000 = $2,250.

Therefore, the husband and wife would owe $2,250 in withholding for the additional Medicare tax on their final Form 1040.