From: John Richards [email@example.com]
Sent: Wednesday, April 17, 2013 11:54 AM
Subject: Important Payroll Medicare Tax Update
To all OSAS Payroll Users:
Starting this past January, 2013, there is a new Additional Medicare Tax. This new tax only applies to employees who earn in excess of $200,000 in Medicare taxable wages.
If your company will NOT have any employees with wages exceeding $200,000, you do not have to change the tax formula. You can postpone making this change until the time comes when someone approaches the limit. I will be leaving the new formula on my website indefinitely, and you can print the formula changes from the website for future reference.
A new .9% tax withholding will apply to all wages over the limit. This new tax only applies to the EMPLOYEE, and the employer does NOT match this part of the tax. You will notice a reference to this new tax on the quarterly 941 report. The new withholding will roll into box 6 (Medicare Tax Withholding) of the W-2 form for affected employees.
Detailed instructions for making the formula change can be found on the support page:
The change should be made prior to when an employee hits the limit, but the formula is self-adjusting and will automatically adjust based on YTD wages. Because of the complexity of editing formulas, I only recommend making this change if you have employees that will exceed the limit. The formula does not need to be changed for all earnings under $200,000.
Formulas are shared among all companies. You only need to make this change in one company, but the change will affect all payroll employees in all companies. Be sure to PROOF your next payroll run after making the formula change. Medicare wages are generally GROSS wages, minus any non-taxable items or pre-tax benefits. On the last page of the Edit Register or Check Register, you have all the figures you need to proof your tax. The standard Medicare tax (MED) is 1.45% of taxable wages. There is no cap on taxable wages.
Feel free to print your adjusted formula and email me a copy of your new formula if you want me to look at it. Sometimes another set of eyes is a good idea.