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Paying Medicare Payroll Taxes

How long must workers continue to pay Medicare payroll taxes?

Q. I am 66 and still working. I’m also enrolled in Medicare Parts A, B, and D. Should I still be paying Medicare payroll deductions out of my earnings when I’m already receiving Medicare benefits?

A. Yes. The law requires workers to continue to pay Medicare payroll taxes as a percentage of earnings throughout the time they are employed—regardless of their age and whether they are receiving Medicare benefits.

The same is true of payroll taxes for Social Security retirement benefits, although these are paid only on income up to a certain annual limit ($106,800 in 2009). Medicare taxes, however, are paid on all earnings, with no cap.

Certain nonprofit organizations that do not pay federal income tax must still withhold Social Security and Medicare taxes from their employees’ wages—though a few people are exempt. Also exempt are some ministers and employees of churches or other religious organizations opposed to public insurance for religious reasons. For details on the special rules that apply in such situations, see IRS Publication 15A: “Employer’s Supplemental Tax Guide.”

Patricia Barry is a senior editor at the AARP Bulletin.

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