An additional Medicare tax of 0.9% is imposed on wages, compensation, and self-employment income in excess of a threshold amount. The threshold amounts are:
However, the threshold amount is reduced (but not below zero) by the amount of the taxpayer's wages. Thus, a single individual who has $145,000 in self-employment income and $130,000 of wages is subject to the 0.9% additional tax on $75,000 of self-employment income ($145,000 - $70,000 (the $200,000 threshold - $130,000 in wages)). No tax deduction is allowed for the additional Medicare tax.
For married couples, employers do not take a spouse's self-employment income or wages into account when calculating Medicare tax withholding for an employee.
If you and your spouse will exceed the $250,000 threshold in 2016 and have not made enough tax payments to cover the additional 0.9% tax, you can file Form W-4 with your employer before year end to have an additional amount deducted from your paycheck to cover the additional 0.9% tax. Otherwise, underpayment of tax penalties may apply.