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For example, younger persons who are still working probably arenât on Medicare and are still paying into the system by a rate of 6.2% of their annual earnings. Elderly persons on Medicare can use the IRS tax deduction to reduce their tax burden by claiming costs associated with Medicare payments.
Social Security (FICA) and Medicare Deduction. A taxpayer may claim a deduction for the amount contributed in the taxable year to FICA or a Railroad Retirement Plan, or to a U.S. or Massachusetts Retirement fund up to $2,000. If married filing joint, each spouse may claim up to $2,000 of his or her own contributions.