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Fed Med/EE Tax is the Federal Medicare Tax that applies to nearly all employee and self-employment earnings in a tax year. Employers collect the tax from every paycheck throughout the year.
Employee Amount
The Fed Med/EE Tax is equal to 2.9 percent of all wages earned. Of each paycheck, 1.45 percent is paid by the employee, and 1.45 percent is paid by the employer.
Self-Employed Amount
Self-employed people must pay the full 2.9 percent, since self-employed people are the employee and the employer.
Purpose
The Medicare Tax money is used to fund the U.S. Medicare health-insurance program. Medicare provides health insurance for people age 65 and older.
Employer Withholding
Employers are required to withhold 1.45 percent of each paycheck, as well as providing the matching 1.45 percent payment. Employees are not required to file an annual tax return on Fed Med/EE Taxes, unlike the federal income tax.
Self-Employed Payments
Self-employed people must pay their own Fed Med/EE Tax. The IRS requires self-employed people to make quarterly payments of the tax.
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