New Medicare Taxes on High Earners for 2013 how will this impact Microsoft Dynamics GP?

New Medicare taxes on high earners, imposed under the Patient Protection and Affordable Care Act (PPACA), mean employers will be required to withhold additional .9 percent of Medicare tax on earnings that exceed $200,000.

There is no employer match for the additional Medicare tax, and no requirement that an employer notify employees when it begins withholding the additional Medicare tax. An employer is required to begin withholding the additional tax in the pay period in which it pays wages in excess of $200,000 to an employee.

For taxable years beginning after Dec. 31, 2012,  employers will be required to withhold additional amounts from the wages of high-earning employers. The Medicare tax rate will increase by .9 percent (from 1.45 percent to 2.35 percent)

At this time, the IRS said it does not plan to add additional boxes to Form W-2 for the additional Medicare tax on wages in excess of $200,000. Employers will report aggregate Medicare wages in Box 5 and the aggregate Medicare tax in Box 6.

This IRS did indicate it will be changing Form 941 and plans to release drafts of revised forms, including Forms 941, 943, and the tax return schemas for the F94X series of returns.

Link to IRS site for detailed information.
http://www.irs.gov/businesses/small/article/0,,id=258201,00.html

With the tax table changes Microsoft Dynamics GP made back with the Social Security split of 4.2/6.2 at that time, Medicare was also split up so we should be able to handle this all in our tax table structure.  There are still some questions around reporting that are getting reviewed and we will know more closer to the end of the 2012 year.

Microsoft will address this new ruling in the 2013 tax table update for Microsoft Dynamics GP 10, 2010 and 2013.

Thanks

Terry Heley