Social Security Benefits

Massachusetts gross income does not include Social Security benefits. Such amounts may be included in federal gross income depending on income thresholds under I.R.C. § 86.


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. Payment amounts may not be combined or transferred from one spouse to the other.

Federal Insurance Contributions Act (FICA) Tax is an amount paid by individuals during the period in which they earn wages for purposes of providing them with benefits when they retire. Social Security benefits are made available to retired workers, their spouses and their dependents as well as to disabled workers, their spouses and their dependents. FICA tax is also known as the Social Security tax.

Specifically, this deduction is allowed for the following:

  • taxes paid to the U.S. under the provisions of the Federal Insurance Contributions Act (FICA), Social Security;
  • taxes paid to the U.S. under the provisions of the Federal Railroad Retirement Act, Tier I and II;
  • contributions to a United States annuity, pension endowment or retirement fund; and
  • contributions to a Massachusetts State, city, town, county and other political subdivision annuity, pension endowment or retirement fund.

Medicare tax withheld from wages should be added to the FICA or U.S. or Massachusetts pension contribution for this deduction, the amount not to exceed $2,000.

Medicare premiums deducted from social security benefits or retirement payments are not an allowable deduction since the benefits are not included in gross income.

Self-employed individuals may deduct the employment tax paid during the taxable year up to a maximum of $2,000.

Note: For federal purposes, the self employment tax paid is calculated on U.S. Form SE. Even though the federal deduction on U.S. Form 1040 is limited to one-half of self employment tax paid, the Massachusetts deduction is based on the full amount of self-employment tax paid but limited to the maximum of $2,000.


Where to Report on Original Tax Return; What to Enclose:

Income

  • Social Security Benefits are not included in Massachusetts gross income

Deduction

  • Amount paid to Social Security, Medicare, R.R., add amounts from Form W-2, lines 4 and 6; Amount paid to U.S. or Massachusetts retirement, use amount from Form W-2, Line 14c. Enter the amount, but not more than $2,000 each, on either Mass Form 1, Lines 11a and 11b or Form 1-NR/PY, Lines 15a and 15b. Add the amounts in a and b and enter the total on Mass Form 1, Line 11 or Form 1-NR/PY, Line 15.
  • Medicare premiums deducted from social security benefits or retirement payments are not an allowable deduction since the benefits are not included in gross income.
  • Nonresidents and part-year residents may claim this deduction only if it is directly related to taxable income reported on Form 1-NR/PY.

Documentation to Submit with Abatement/Amended Tax Return:

  • Copy of U.S. Form(s) W-2 to substantiate amounts paid;
  • Copy of U.S. Schedule SE - Self-Employment Tax.

Massachusetts References:

  • M.G.L. Chapter 62, Sections 2(a)(1)(F), 2(a)(2)(H); 3B(a)(3) and (4)
    Federal References:

  • I.R.C. §§ 86; 164(f)

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