What Are Medicare Wages?
Medicare wages are not the same thing as the wages on which you must pay income tax. Medicare wages are a worker’s total earnings for a year after removing the costs for several benefits, such as health savings accounts, donations to a dependent care flexible spending programs, and dental and medical insurance premiums.
Is the Additional Medicare Tax compulsory for everyone on Medicare?
According to research, everyone pays taxes to Medicare, but only people that earn above the set income limits will pay the additional tax. People at the income limits will also pay the extra tax. You don’t need to pay any additional tax if you earn less than the income limits. If you earn around the limit, you can use accepted pre-tax deductions to avoid paying the extra tax. Pre-tax deductions include:
- Flexible spending accounts (FSA)
- Retirement accounts
- Health savings accounts (HSA)
Regardless of your income, you still have to pay the regular 1.45 percent. Medicare does not have an income limit for the standard tax amount.