Additional Medicare Tax is calculated from the adjusted gross wage of an employee based on pay period end date instead of pay date. The IRS looks at pay date to calculate taxes.

Additional Medicare Tax is being calculated from the adjusted gross wage of an employee based on pay period end date instead of pay date. The IRS looks at pay date to calculate taxes. This can cause issue when the pay period end date is in one fiscal year and the pay date is in the next fiscal year. For example, a pay period end date of 12/31/2013 and a pay date of 01/05/2014 - the FE calculates the additional medicare based on the adjusted gross wage of 2013 for this calculation whereas the IRS is expecting the additional medicare to be calculated based on the adjusted gross wage for 2014. This is often noticed when employees have to pay additional medicare (which is only placed on gross wages once they exceed $200,000) on the first paycheck of the new year when their gross adjusted wage couldn't have reached 200,000 yet.
Download and install the latest version and patch, if applicable. 

Environment

 7.86.93 patch 1
 7.86.93, patch 2 ; 7.87.164

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