FICA (HI) Medicare Tax
Vantagepoint calculates FICA (HI) Medicare tax based on the employee's gross wages.
How Vantagepoint Calculates Tax
To calculate an employee's Medicare tax, Vantagepoint does the following:
- Subtracts any 125/Cafeteria Plan contributions from the employee's gross wages.
- Multiplies the resulting amount by 1.45%. There is no maximum wages amount.
An additional tax rate of 0.9% is applied when the employee's wages exceed the threshold amount of the filing status, setting the total Medicare tax at 2.35%. The threshold amount is $250,000 for married filing jointly and $200,000 for the other filing statuses.
Employer FICA amounts are calculated in each payroll run and posted as part of a combined FICA liability, but are not stored as a separately reportable value.
Vantagepoint now takes a flat withholding percentage of the taxable wages for the employer FICA-HI when the withholding is set to System and is Active. This employer liability is not annualized. As a result, there will be a rounding difference between the payroll deductions and the 941 liability for the employer liability. When the FICA-HI withholding is not set to System or is inactivated, no employer portion is posted. The 941 report will always reflect the 1.45% or 2.35% liability owed, regardless of withholding method.