Final Answer:
The given statement "The additional Medicare rate of 0.9% is applied to both the employer and employee Medicare withholding for wages over $200,000." is False because the additional Medicare rate of 0.9% applies only to the employee's Medicare withholding for wages over $200,000, not to the employer's withholding. Thus, the correct answer is option is b) False.
Step-by-step explanation:
The additional Medicare rate of 0.9% is not applied to both the employer and employee Medicare withholding for wages over $200,000. While employees are subject to the additional 0.9% Medicare tax on wages exceeding $200,000, employers do not share this increased rate. Employers only withhold the standard Medicare rate from employees' wages, regardless of income. Therefore, the statement that the additional Medicare rate applies to both employer and employee withholdings for wages over $200,000 is false.
The additional Medicare tax was introduced as part of the Affordable Care Act (ACA) and is specifically aimed at high-income individuals. It applies to earned income (such as wages) above the $200,000 threshold for individual taxpayers or $250,000 for married couples filing jointly. It's crucial for both employers and employees to understand these distinctions to ensure accurate payroll processing and tax compliance.
Thus, the correct answer is option is b) False.