How to Calculate Annual Medicare Taxes Withheld

by Ashley Mott

Employers withhold Medicare taxes under the Federal Insurance Contributions Act, which is better known as FICA. FICA tax contributions fund both Social Security benefits and the Medicare program. For payroll employees, the employer pays half of the Social Security and Medicare taxes, while the employee's half is withheld from the paycheck. Some employers list the total FICA taxes withheld, while others itemize the individual deductions. When the FICA taxes are not itemized, the individual must determine the portion withheld for Medicare. Calculating the Medicare withholdings for a payroll employee only requires knowing the gross income of a taxpayer.

Consult your final pay stub for the tax year. This stub lists your earnings for the year to date and should list gross and net earnings.

Multiply the gross earnings total for the tax year by the current individual withholding percentage. As of 2012, the employee's contribution equaled 1.45 percent. This is the amount withheld from the employee's earnings to cover Medicare contributions.

Multiply the gross earnings by the total withholding percentage. As of 2012 the total contribution to Medicare, including the half paid by the employer, for an individual is 2.9 percent. This number allows the individual to determine the total Medicare contributions attributed to his name.

Tips

  • There are no limits on the amount of income subject to Medicare withholdings. While Social Security tax withholdings stop at gross earnings of greater than $110,100, as of 2012, Medicare withholdings are limitless.
  • If you are self-employed you must pay both the employer and employee contributions to Medicare and Social Security. To calculate the full portion of necessary Medicare contributions, multiply your net profit by 92.35 percent to determine net earnings. Multiply the new net earnings total by 2.9 percent. This total is the annual payment to Medicare, not a withholding.
  • If it is the end of the tax filing year, consult the W-2 obtained from your employer to view Medicare withholdings. The total is listed separately on the W-2.

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