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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.
Federal income taxes, FICA and Medicare are required deductions from your paycheck. Some states and cities require additional deductions for state and city income taxes. Other deductions such as contributions to retirement accounts or savings plans, however, are voluntary.