IRS Considers New Box For Additional Medicare Tax

By Michael Trimarchi

An extra Form W-2 box to report the additional 0.9 percent Medicare tax on wages paid to employees in excess of $200,000 under the Affordable Care Act is being considered by the Internal Revenue Service, an agency official said March 2.

“We're exploring options,” said Paul Carlino, a branch chief in the Office of the Chief Counsel, adding that changes would not occur any time soon. “It's not happening in 2016—or 2015,” he said.

Carlino, who shared a panel discussion with Judy Davis, senior IRS tax analyst, at the American Payroll Association's Capital Summit, acknowledged that adding a box to Form W-2, Wage and Tax Statement, would be a major undertaking.

Employers must withhold the additional tax from wages greater than $200,000 without regard to filing status or wages paid by another employer, and are not to start withholding any extra amounts until the $200,000 threshold is reached. There is no employer share of the additional Medicare tax; the additional tax only applies to employees.

Employers would need up to 18 months to deal with a major change to the W-2, a payroll practitioner said during a question-and-answer period.

To contact the reporter on this story: Michael Trimarchi in Washington at