Form 8959 for Expats Explained: The 0.9% Additional Medicare Tax on High Earners

If you earn more than $200,000 (single) or $250,000 (married filing jointly), you owe an extra 0.9% Medicare tax on the income above that threshold. Form 8959 is the form that calculates what you owe and reconciles it against what your employer already withheld. For most high-earning expats, the amount is manageable, but there’s a critical catch: the Foreign Earned Income Exclusion does not reduce your Additional Medicare Tax.

According to the IRS, the Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement compensation above filing-status-based thresholds. This 0.9% surtax was introduced in 2013 as part of the Affordable Care Act and is in addition to the standard 1.45% Medicare tax everyone pays. These thresholds have not been adjusted for inflation since 2013, which means more taxpayers cross them each year as wages rise. The basics:

Tax rate: 0.9% on income above the threshold (on top of the regular 1.45% Medicare tax)
Single threshold: $200,000
Married filing jointly: $250,000
Married filing separately: $125,000
FEIE does not help: All foreign-earned income counts toward the threshold, even if you exclude it from income tax

Don’t Miss the 0.9% Medicare Tax on High Income

Greenback helps you determine if Form 8959 applies to you and how to report it.

Here’s who owes this tax, how it works for expats, and why employer withholding often doesn’t match what you actually owe.

Who Must File Form 8959?

You need Form 8959 if your Medicare wages plus self-employment income exceed the threshold for your filing status, or if your employer withheld Additional Medicare Tax from your wages (which happens automatically once your wages with any single employer exceed $200,000 in a calendar year).

Filing Status	Threshold
Single or Head of Household	$200,000
Married Filing Jointly	$250,000
Married Filing Separately	$125,000
Qualifying Surviving Spouse	$200,000

These thresholds have remained the same since the tax was introduced in 2013 and are not indexed for inflation. As salaries rise over time, more taxpayers, including expats in senior or specialized roles abroad, are crossing these thresholds.

How the Additional Medicare Tax Is Calculated

The math is simple: take your total Medicare wages and self-employment income, subtract your filing-status threshold, and multiply the excess by 0.9%.

Example (single filer): Rachel earns $240,000 as a corporate expat in Singapore. Her Additional Medicare Tax: ($240,000 – $200,000) x 0.9% = $360. This is in addition to the regular 1.45% Medicare tax on her full salary.

Example (married filing jointly): James and Laura live in London. James earns $180,000, and Laura earns $120,000 for a combined $300,000. Their Additional Medicare Tax: ($300,000 – $250,000) x 0.9% = $450.

Example (self-employed): David runs a consulting business from Berlin, earning $230,000 in net self-employment income. His Additional Medicare Tax: ($230,000 – $200,000) x 0.9% = $270. This is on top of his regular 2.9% Medicare portion of self-employment tax, bringing his total Medicare rate to 3.8% on income above $200,000.

Why the FEIE Does Not Reduce Additional Medicare Tax

This is the most important thing for expats to know about Form 8959. The Foreign Earned Income Exclusion can exclude up to $130,000 (2025) or $132,900 (2026) of foreign earned income from federal income tax, but it has zero effect on Medicare tax calculations. The IRS explicitly states there are no special rules for U.S. citizens living abroad regarding the Additional Medicare Tax.

What this means in practice: If you earn $220,000 abroad and exclude $130,000 through the FEIE, your income tax is calculated on $90,000. But your Additional Medicare Tax is still calculated on $220,000, which means you owe 0.9% on $20,000 ($180). The FEIE doesn’t move the needle on this tax at all.

Similarly, the Foreign Tax Credit cannot be applied against the Additional Medicare Tax. There is no credit or exclusion that reduces this tax. If your income exceeds the threshold, you owe it.

Why Employer Withholding Often Doesn’t Match What You Owe

Employers are required to start withholding the Additional 0.9% Medicare Tax once your wages with that employer exceed $200,000 in a calendar year, regardless of your filing status. This creates mismatches in several common situations:

Married filing jointly with two incomes: Employers withhold at the $200,000 threshold per employee, but the MFJ threshold is $250,000. If neither spouse individually exceeds $200,000 but their combined income exceeds $250,000, no employer withheld the Additional Medicare Tax, and the couple owes it when they file. Form 8959 reconciles this.
Married filing separately: The threshold drops to $125,000, but employers still withhold at $200,000. If your wages are between $125,000 and $200,000 and you file separately, you owe Additional Medicare Tax that was never withheld.
Multiple employers in one year: If you switched jobs mid-year and earned $150,000 at each, neither employer withheld Additional Medicare Tax (since neither saw you exceed $200,000). But your combined wages are $300,000, so you owe 0.9% on $100,000 ($900) when you file.
Overwithholding refund scenario: If you’re married filing jointly and one spouse earns $260,000 while the other earns nothing, the employer withheld Additional Medicare Tax on $60,000 ($540). But the MFJ threshold is $250,000, so you only owe 0.9% on $10,000 ($90). You get the $450 difference back through Form 8959.

How Additional Medicare Tax Interacts with Other Expat Taxes

Self-employment tax: If you’re self-employed abroad, your regular Medicare rate is 2.9% (the full employer + employee share). The Additional Medicare Tax adds 0.9% on self-employment income above the threshold, bringing your total Medicare rate to 3.8% on the excess. This is separate from the 12.4% Social Security tax portion.
Totalization agreements: If you live in a country with a totalization agreement and pay into that country’s social security system, you may be exempt from U.S. FICA taxes entirely (including Medicare). In that case, the Additional Medicare Tax would not apply because you don’t have U.S. Medicare wages or U.S. self-employment income subject to FICA.
Net Investment Income Tax (Form 8960): High-earning expats should also be aware of the 3.8% Net Investment Income Tax, which applies to investment income (dividends, interest, capital gains, rental income) when your modified AGI exceeds the same thresholds ($200,000 single, $250,000 MFJ). Form 8960 is a separate form, but the two surtaxes often apply to the same taxpayers. The FTC can offset income tax on foreign investment income but cannot offset the Net Investment Income Tax.
Schedule 2: Your Additional Medicare Tax from Form 8959 flows to Schedule 2, Part I of your Form 1040.

How Greenback Handles Additional Medicare Tax for Expats

The Additional Medicare Tax is straightforward, but it sits within a complex web of expat tax obligations. Our CPAs and Enrolled Agents handle Form 8959 as part of your complete return by:

Calculating your total Medicare wages across all sources: If you had multiple employers, switched jobs, or have both W-2 wages and self-employment income, we combine everything and apply the correct threshold for your filing status.
Reconciling employer withholding against your actual liability: If your employer over-withheld or under-withheld the Additional Medicare Tax (common for MFJ couples and job changers), we reconcile through Form 8959 to determine your refund or balance due.
Coordinating with the FEIE, FTC, and totalization agreements: Since the FEIE and FTC don’t reduce Additional Medicare Tax, and totalization agreements can eliminate it entirely, the right combination of strategies matters. We make sure your return applies each tool to the correct tax obligation.
Identifying Net Investment Income Tax exposure: If your income is high enough to trigger Form 8959, it may also trigger Form 8960 on your investment income. We review both and prepare both forms when needed.

Frequently Asked Questions

Does the FEIE reduce the Additional Medicare Tax?

No. The Foreign Earned Income Exclusion reduces your federal income tax but has no effect on the Additional Medicare Tax. All foreign-earned income counts toward the $200,000/$250,000 threshold, regardless of whether you exclude it from income tax through the FEIE. The IRS confirms there are no special rules for U.S. citizens abroad regarding this tax.

Can I use the Foreign Tax Credit against the Additional Medicare Tax?

No. The Foreign Tax Credit offsets only federal income tax. It cannot be applied to reduce the Additional Medicare Tax or the Net Investment Income Tax (Form 8960). There is no credit, exclusion, or deduction that reduces the Additional Medicare Tax once your income exceeds the threshold.

Do the income thresholds change each year?

No. The thresholds ($200,000 single, $250,000 MFJ, $125,000 MFS) have been the same since the tax was introduced in 2013 and are not indexed for inflation. As wages rise, more taxpayers cross these thresholds each year without any actual increase in purchasing power.

What if my employer already withheld Additional Medicare Tax?

Employers automatically withhold the extra 0.9% once your wages with that employer exceed $200,000 in a calendar year. Form 8959, Part V, reconciles what was withheld against what you actually owe based on your filing status and total income. If your employer over-withheld (common for MFJ couples where one spouse earns over $200,000 but the combined income is close to $250,000), you’ll receive a credit on your return.

Does the Additional Medicare Tax apply if I’m covered by a totalization agreement?

It depends on your situation. If you’re exempt from U.S. FICA taxes because you pay into a foreign social security system under a totalization agreement and have a Certificate of Coverage, your wages aren’t subject to U.S. Medicare tax, and the Additional Medicare Tax would not apply to those wages. However, if you have U.S.-source income or self-employment income not covered by the totalization agreement, it could still trigger the tax.

Your Next Steps

If your total wages and self-employment income exceed $200,000 (single) or $250,000 (married filing jointly), Form 8959 will be part of your return. The tax itself is typically a modest amount, but the interaction with employer withholding, the FEIE, and multiple income sources can create mismatches that need to be reconciled.

If you’re not sure whether you owe Additional Medicare Tax or how it fits into your broader expat tax strategy, we can help. Our CPAs and Enrolled Agents prepare returns for high-earning expats every day and handle the full picture, from Form 8959 through the FEIE, FTC, and beyond.

Contact us, and one of our Customer Champions will be happy to help. If you’re ready to be matched with a Greenback accountant, get started here.

Stay Compliant With Additional Medicare Tax Rules

Greenback helps you handle Form 8959 and related filings accurately.

This article is for informational purposes only and does not constitute tax, legal, or accounting advice. Every tax situation is different. For advice related to your specific situation, consult with a qualified tax professional.