Calculating Additional Medicare Tax (Form 8959) - Lionel's Case

This assignment involves the preparation of Form 8959, Additional Medicare Tax, for a single taxpayer named Lionel for the 2018 tax year. Lionel has self-employment income and received two W-2 forms. The assignment requires completing Parts I, II, IV, and V of Form 8959, using the provided case information, including Medicare wages, Medicare tax withheld, and self-employment income. The solution demonstrates the calculation of the Additional Medicare Tax based on the provided income and withholding data. The document showcases the step-by-step process of filling out the form accurately, including the application of the relevant tax thresholds and rates. The final completed form provides a clear illustration of how to calculate and report the Additional Medicare Tax liability.

DO NOT FILE
July 31, 2018
DRAFT AS OF
Form 8959
Department of the Treasury
Internal Revenue Service
Additional Medicare Tax
If any line does not apply to you, leave it blank. See separate instructions.
Attach to Form 1040, 1040NR, 1040-PR, or 1040-SS.
Go to www.irs.gov/Form8959 for instructions and the latest information.
OMB No. 1545-0074
2018Attachment
Sequence No.71
Name(s) shown on return Your social security number
Part I Additional Medicare Tax on Medicare Wages
1 Medicare wages and tips from Form W-2, box 5. If you have
more than one Form W-2, enter the total of the amounts
from box 5 . . . . . . . . . . . . . . . . 1
2 Unreported tips from Form 4137, line 6. . . . . . . 2
3 Wages from Form 8919, line 6. . . . . . . . . . 3
4 Add lines 1 through 3 .. . . . . . . . . . . . 4
5 Enter the following amount for your filing status:
Married filing jointly . . . . . . . . . . $250,000
Married filing separately. . . . . . . . . $125,000
Single, Head of household, or Qualifying widow(er) $200,0005
6 Subtract line 5 from line 4. If zero or less, enter -0-. . . . . . . . . . . . . . 6
7 Additional Medicare Tax on Medicare wages. Multiply line 6 by 0.9% (0.009). Enter here and
go to Part II . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Part II Additional Medicare Tax on Self-Employment Income
8 Self-employmentincome from Schedule SE (Form 1040),
Section A, line 4, or Section B, line 6. If you had a loss, enter
-0- (Form 1040-PR and Form 1040-SS filers, see instructions.)8
9 Enter the following amount for your filing status:
Married filing jointly.. . . . . . . . . . $250,000
Married filing separately. . . . . . . . . $125,000
Single, Head of household, or Qualifying widow(er) $200,0009
10 Enter the amount from line 4. . . . . . . . . . 10
11 Subtract line 10 from line 9. If zero or less, enter -0- .. . 11
12 Subtract line 11 from line 8. If zero or less, enter -0- .. . . . . . . . . . . . . 12
13 Additional Medicare Tax on self-employment income. Multiply line 12 by 0.9% (0.009). Enter
here and go to Part III .. . . . . . . . . . . . . . . . . . . . . . . 13
Part III Additional Medicare Tax on Railroad Retirement Tax Act (RRTA) Compensation
14 Railroad retirement(RRTA) compensationand tips from
Form(s) W-2, box 14 (see instructions). . . . . . . 14
15 Enter the following amount for your filing status:
Married filing jointly.. . . . . . . . . . $250,000
Married filing separately. . . . . . . . . $125,000
Single, Head of household, or Qualifying widow(er) $200,00015
16 Subtract line 15 from line 14. If zero or less, enter -0-. . . . . . . . . . . . . 16
17 Additional Medicare Tax on railroad retirement (RRTA) compensation. Multiply line 16 by
0.9% (0.009). Enter here and go to Part IV. . . . . . . . . . . . . . . . . 17
Part IV Total Additional Medicare Tax
18 Add lines 7, 13, and 17. Also include this amount on Schedule 4 (Form 1040), line 62 (check
box a) (Form 1040NR, 1040-PR, and 1040-SS filers, see instructions), and go to Part V. . 18
Part V Withholding Reconciliation
19 Medicare tax withheld from Form W-2, box 6. If you have
more than one Form W-2, enter the total of the amounts
from box 6 . . . . . . . . . . . . . . . . 19
20 Enter the amount from line 1. . . . . . . . . . 20
21 Multiply line 20 by 1.45% (0.0145). This is your regular
Medicare tax withholding on Medicare wages .. . . . 21
22 Subtract line 21 from line 19. If zero or less, enter -0-. This is your Additional Medicare Tax
withholding on Medicare wages. . . . . . . . . . . . . . . . . . . . 22
23 Additional Medicare Tax withholding on railroad retirement (RRTA) compensation from Form
W-2, box 14 (see instructions). . . . . . . . . . . . . . . . . . . . . 23
24 Total Additional Medicare Tax withholding. Add lines 22 and 23. Also include this amount
with federal income tax withholding on Form 1040, line 16 (Form 1040NR, 1040-PR, and
1040-SS filers, see instructions). . . . . . . . . . . . . . . . . . . . 24
For Paperwork Reduction Act Notice, see your tax return instructions. Cat. No. 59475X Form 8959(2018)
Lionel