Does the extra 0.9% Medicare surtax apply to my self-employment income?
Yes. On top of the standard 2.9% Medicare portion of self-employment tax, the IRS charges an Additional Medicare Tax of 0.9% on earnings above certain thresholds, currently $200,000 for single filers and $250,000 for married filing jointly. It applies to the combined total of your wages and self-employment income over the threshold, and unlike the Social Security portion there is no wage-base ceiling. You calculate it on Form 8959. Note the employer half of the deduction does not apply to this surtax, so it is a straight 0.9% add-on. High earners often under-withhold here, so factor it into your quarterly estimates to avoid a surprise underpayment penalty at filing time.
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