The National Directory of Certified Public Accountants

Ask A CPA - Affordable Care Act - Small Biz

Is Third Party Sick Pay Used In The Calculation Of The $200,000 Threshold?

Yes. Wages paid by an employer and by the third party need to be aggregated to determine whether the $200,000 withholding threshold has been met. The same rules that currently assign responsibility for sick pay reporting and payment of Medicare tax based on which party is treated as the employer (that is, the employer, the employer’s agent, or a third party that is not the employer’s agent) apply also to Additional Medicare Tax.

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