Do the Amish People Pay Taxes?

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Yes, the Amish people do pay taxes in the United States. Despite common misconceptions, the Amish are subject to most federal, state, and local taxes like any other U.S. citizen. However, there are specific exemptions related to Social Security and Medicare taxes due to their religious beliefs.

1. Taxes Paid by the Amish

a. Income Taxes

  • Federal Income Tax: The Amish pay federal income taxes. They file Form 1040 like other taxpayers.
  • State Income Tax: They also pay state income taxes in states where such taxes are imposed.
  • Local Taxes: Any applicable local income taxes are also paid.

b. Property Taxes

  • Real Estate Taxes: The Amish pay property taxes on their homes and land.
  • School Taxes: Even though Amish children typically attend their own schools, they still pay local school taxes.

c. Sales Taxes

  • Purchases: The Amish pay sales taxes on goods and services subject to taxation.

d. Excise Taxes

  • Fuel Taxes: Although they primarily use horse-drawn buggies, the Amish pay fuel taxes on any gasoline or diesel they purchase for generators or other equipment.
  • Other Excise Taxes: They pay excise taxes on items like tobacco and alcohol if they purchase them.

2. Exemptions from Social Security and Medicare Taxes

a. Religious Exemption

  • Self-Employment Tax: The Amish are exempt from paying self-employment tax, which funds Social Security and Medicare, under specific conditions.
  • Employees: Amish employers do not withhold Social Security and Medicare taxes from the wages of Amish employees who have a religious exemption.

b. Legal Basis

  • Internal Revenue Code (IRC) Section 1402(g): Allows exemption from self-employment tax for members of recognized religious groups opposed to insurance.
    “An individual may file an application for exemption if he is a member of a recognized religious sect or division thereof, and is conscientiously opposed to acceptance of the benefits of any private or public insurance…” (26 U.S.C. §1402(g))

c. Requirements for Exemption

  • Form 4029: Members must file Form 4029, “Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits.”
    • Criteria:
      • Membership in a recognized religious sect.
      • Adherence to established teachings opposing insurance benefits.
      • Waiver of all rights to Social Security and Medicare benefits.
  • Approval: The IRS and the Social Security Administration (SSA) must approve the application.

d. Employer Responsibilities

  • Amish Employers with Non-Amish Employees: Must withhold and pay Social Security and Medicare taxes for non-exempt employees.
  • Non-Amish Employers with Amish Employees: Must not withhold Social Security and Medicare taxes from exempt Amish employees but must have the approved Form 4029 on file.

3. Reasons for Exemption

a. Religious Beliefs

  • Community Support: The Amish believe in caring for their own members through community support rather than relying on government assistance.
  • Insurance Opposition: They object to insurance systems, including Social Security and Medicare, viewing them as a reliance on external institutions.

4. Impact of Exemption

a. No Benefits Received

  • Social Security: Exempt individuals are not eligible for Social Security retirement, disability, or survivor benefits.
  • Medicare: Exempt individuals cannot receive Medicare benefits.

b. Personal Responsibility

  • Healthcare Costs: Amish communities typically handle healthcare costs internally or negotiate directly with healthcare providers.
  • Retirement Support: Elderly Amish are supported by family and community rather than government programs.

5. Compliance and Enforcement

a. IRS Oversight

  • Tax Compliance: The IRS ensures that the Amish comply with tax laws, including income and other applicable taxes.
  • Exemption Verification: The IRS and SSA verify exemptions through Form 4029 approvals.

Conclusion

The Amish do pay most taxes like other U.S. citizens, including federal and state income taxes, property taxes, sales taxes, and excise taxes. They are exempt from Social Security and Medicare taxes due to their religious beliefs opposing insurance programs, provided they meet specific criteria and have filed Form 4029 with the IRS and SSA. This exemption means they also waive rights to receive benefits from these programs. Understanding these tax obligations and exemptions is essential for accurate compliance with U.S. tax laws.

Disclaimer: The information provided is for general informational purposes and should not be considered legal or tax advice. Tax laws are complex and subject to change. For advice specific to your situation, consult a qualified tax professional or refer to official IRS resources.