IRS 8959 Explained

What is IRS 8959?

IRS 8959 is a tax form used to report additional Medicare tax liabilities. It is primarily utilized by individuals and businesses that meet specific income thresholds. The form is essential for determining the amount of additional Medicare tax owed based on high earnings.

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Purpose of IRS 8959

The main purpose of IRS 8959 is to calculate and report additional Medicare tax for high-income earners. This tax applies to individuals whose wages exceed certain limits. By filing this form, taxpayers ensure compliance with federal tax regulations and avoid potential penalties. The additional Medicare tax is separate from the standard Medicare tax and is assessed at a higher rate on income over designated thresholds.

Where is IRS 8959 used and by whom?

IRS 8959 is predominantly used by the following groups:

1.

Individuals: Those who earn income above the threshold limits set by the IRS, whether through employment or self-employment.
2.

Employers: Businesses that pay wages to employees meeting these threshold limits must also file this form to ensure correct tax withholding.

Typical scenarios for using IRS 8959 include:

1.

A single person earning more than $200,000 in a year.
2.

Married couples filing jointly with a combined income exceeding $250,000.
3.

Self-employed individuals with a net earnings exceeding $200,000.

Step-by-step: how to fill out IRS 8959

Filling out IRS 8959 involves several clear steps. Here’s a simple guide to help you complete the form:

1.

Step 1: Gather your income information, including wages and other compensation.
2.

Step 2: Identify if your wages exceed the threshold. Refer to IRS guidelines for specific amounts.
3.

Step 3: Use the form's sections to input your wages and calculate the additional Medicare tax owed.
4.

Step 4: Review your entries for accuracy. Errors may lead to delays or issues with the IRS.
5.

Step 5: Submit the completed form, either electronically or via mail.

pdfFiller can facilitate filling out this form with its user-friendly interface for editing and eSigning PDFs, making it easy to manage your tax documents.

Who is required to complete IRS 8959?

Individuals and entities that must complete IRS 8959 fall under specific categories:

1.

Individuals earning more than $200,000 in a calendar year.
2.

Married couples earning a joint income exceeding $250,000.
3.

Self-employed individuals whose net earnings surpass $200,000.

If you fall into any of these categories for the tax year, it is imperative to complete and file IRS 8959 to stay compliant with tax regulations.

Information you need to complete IRS 8959

To fill out IRS 8959 effectively, gather the following information:

1.

Your total wages and compensation for the year.
2.

Any additional income from self-employment.
3.

Your filing status (single, married filing jointly, etc.).
4.

Any Medicare tax that has already been withheld by your employer.

Having this information will ensure a smoother process when completing the form.

How to submit IRS 8959

Submitting IRS 8959 can be done through various channels:

1.

Online: Use the IRS e-file system if you’re filing taxes electronically.
2.

Mail: Send the completed form to the address indicated in the IRS instructions for the specific tax year.
3.

IRS Systems: You may also submit through tax preparation software that includes IRS form functionalities.

It’s essential to be aware of submission deadlines, typically aligning with your regular tax filing deadlines in April, to avoid any late fees or penalties.

When to update or refile IRS 8959

There are situations where you may need to update or refile IRS 8959:

1.

If your income changes significantly during the tax year.
2.

Changes in marital status or filing status.
3.

If you discover errors in your initial submission.
4.

Any updates in your business details or earnings as a self-employed individual.

Staying alert to these changes ensures your tax records remain accurate and compliant with IRS requirements.

What happens if you don’t file IRS 8959?

Failing to file IRS 8959 on time can lead to several consequences:

1.

Penalties: You may incur monetary penalties for late filing or underpayment.
2.

Interest: The IRS charges interest on unpaid taxes, which can accumulate over time.
3.

Legal Compliance: Ignoring tax obligations may lead to serious legal issues and challenges during future tax filings.

To avoid these potential issues, ensure that you file IRS 8959 accurately and on time, keeping all your records organized and up to date.

Fill out IRS 8959 online

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Frequently Asked Questions About the IRS 8959

What is the IRS 8959 form?

The IRS 8959 form is a tax document used to report the additional Medicare tax. This tax applies to high-income earners and is calculated based on wages, compensation, and self-employment income that exceed specific thresholds. Completing the IRS 8959 accurately is essential to ensure compliance with federal tax obligations.

Who needs to file the IRS 8959?

Individuals who earn above the threshold set by the IRS must file the IRS 8959. For single filers, the threshold is $200,000, and for married couples filing jointly, it is $250,000. If your income exceeds these limits, you are responsible for filing the IRS 8959 to report the additional Medicare tax amount.

How do I calculate the tax owed on the IRS 8959?

To calculate the tax owed on the IRS 8959, first determine your total income above the specified threshold. The additional Medicare tax rate is 0.9% on this excess income. Be sure to review the IRS instructions for the IRS 8959 for any specific calculations and examples to ensure accuracy.

Where can I find the IRS 8959 form?

The IRS 8959 form can be found on the official IRS website. It is available as a downloadable PDF, making it easy to access and print. Additionally, many tax preparation software programs will include the IRS 8959 in their tax filing options so you can complete it without hassle.

What information do I need to complete the IRS 8959?

To complete the IRS 8959, you will need information regarding your total wages, compensation, and any self-employment income. Additionally, you will need your filing status to determine the applicable threshold. Having accurate income documentation will help ensure the IRS 8959 is completed correctly.

When is the IRS 8959 due?

The IRS 8959 is typically due on the same date as your individual income tax return, which is usually April 15 for most filers. If you file for an extension, the IRS 8959 must be submitted by the extended deadline. Failing to file the IRS 8959 on time can result in penalties and interest.

Can I e-file the IRS 8959?

Yes, you can e-file the IRS 8959 if you are using tax preparation software that supports the form. Many modern tax platforms enable direct e-filing of IRS forms, including the IRS 8959, making it convenient to submit your tax information electronically. E-filing can help speed up processing and potential refunds.

What happens if I don't file the IRS 8959?

Failing to file the IRS 8959 when required can lead to penalties, interest on any unpaid tax, and could trigger further scrutiny from the IRS. It is important to file this form to report any additional Medicare taxes owed. Ensuring accurate and timely submission of the IRS 8959 helps avoid complications with your tax status.

How can pdfFiller assist with the IRS 8959 form?

pdfFiller provides a seamless platform for filling out and managing the IRS 8959 form. With its user-friendly interface, you can easily edit the PDF, sign electronically, and store your documents securely. Using pdfFiller can make the process of handling the IRS 8959 efficient, allowing you to focus on more important financial matters.

Is there any assistance available for filling out the IRS 8959?

Yes, there are several resources available for assistance with the IRS 8959. The IRS provides detailed instructions on their website, and numerous tax professionals can offer help in understanding the requirements. Utilizing tools like pdfFiller can simplify filling out the IRS 8959 form and ensure that you are adhering to all necessary guidelines.

Author:

by Iryna Marchuk

Lead Writer/Blogs Manager at airSlate

Disclaimer: This content is for informational purposes only. It is not legal or other professional advice. airSlate provides this material on an "as-is" basis and disclaims all representations, guarantees, or warranties, whether express, implied, or statutory, including but not limited to warranties of merchantability, fitness for a particular purpose, or accuracy.