Do The Amish Pay Taxes?
Who Are The Amish?
A group known as the Amish adhere to the principles of Swiss citizen Jacob Ammann (1680–1742). The Amish are a Protestant sect with beliefs comparable to Mennonites. Most Amish people reside in the United States, where they uphold conservative ideals that forbid cussing, voting, and serving in the military.
They object to the usage of all modern conveniences. Amish folks go around in horse-drawn buggies and live in humble homes and speak the language called ‘Pennsylvania Dutch’. They lack access to modern amenities like electricity and telephones at home. Males typically wear beards and button-fly pants rather than zip-fly pants.
Women often dress in this tradition with white head coverings and buttonless outfits fastened with straight pins. Moreover, they often come together in groups and live on a farm where they ride their horses as vehicles on scrappy roads. This article will look at the facts and discuss whether the Amish pay taxes in the U.S., give more information about their tax exemption rights, and a lot of other US tax categories.
Do the Amish Pay Taxes?
If you live in Pennsylvania, you’ve probably seen them around. The Amish community is prominent but still lives in other ways than regular U.S. citizens. Chances are you have questions about whether Amish people pay state income taxes, property taxes, gas taxes, or any taxes. Our content will delve deep into the question: Do Amish people pay taxes?
The answer is that your Amish neighbors pay taxes, but only to a certain extent. There are rules and tax laws, and families that earn money usually have to pay taxes.
What Taxes do the Amish Pay?
At this point, being a part of Amish communities poses many benefits in terms of paying taxes to the government. Amish people are held responsible for paying sales tax and property tax.
However, Amish do not need to pay social security tax when self-employed. So even if Amish people have an employer that is non-Amish, they won’t collect social security benefits. To qualify for an exemption, you must join the Amish church.
So, why is this? Well, according to Amish beliefs, it is essential to be self-sufficient. The Bible states that everyone who believes must lead a particular lifestyle. Government aid is, therefore, not generally accepted within their community, and self-sufficiency is among their beliefs towards god.
In certain circumstances, for whatever reason, Amish businesses might use Medicaid because health insurance is essential for their employees or the field they work in. However, most of the Amish population, especially the old-order Amish, will care for the belief that self-sufficiency is essential.
Still, don’t be fooled; Amish people speak English and don’t lack intelligence. They pay specific bills like a regular American or most people worldwide do. This means that they are part of the people who qualify for education, tax advantage, government benefits, and tax exemptions. Like all Americans, they will pay state income tax and sales taxes if they claim social benefits for the common welfare.
The U.S. government has established two main reasons for the Amish not paying social security packages and getting tax exemptions. For example, Amish people may use:
- no services or products are consumed that use extensive government funding
- the Amish claim no government aid or social security due to religious beliefs.
Even though Amish people are typically exempt from paying Social Security taxes, there are instances in which they may be required to do so. This can occur if the ownership structure of your place of employment includes both Amish and non-Amish individuals. For example, Amish business owners must contribute to the Social Security system if they employ workers not members of the Amish faith or Amish youths who have not yet joined the church.
What Taxes are the Amish Exempt From?
If the IRS does give an exemption, it will only be for earnings in the future. While this is true, it only applies if the person is self-employed, works in a partnership with exempt people, or is hired by an exempt person.
Let’s say that an Amish person finds a job with a company that doesn’t have the exemption. In this case, the federal, state, and local governments will take FICA and FUTA taxes out of the Amish worker’s paycheck just like they would from any other employee’s.
Anyone who makes payments towards social services is eligible to receive compensation in the form of social security. Because the Amish do not contribute to social services through taxes (like regular taxpayers), they are not eligible for social compensation from the government.
Do Amish children attend school?
Although Amish children start formal education at a young age and continue through the eighth grade, they do not attend public schools. Even if Amish parents choose not to enroll their children in public schools, they must still pay taxes to support such institutions. Because most older Amish children don’t attend school, school taxes are also not applicable.
However, schooling is fundamental to Amish, and it’s a myth that youth don’t attend school in this group. In addition, there are even certain schoolhouses with an Amish teacher that young students attend.
What are FICA and FUTA?
FICA - Federal Insurance Contributions Act
The Federal Insurance Contributions Act (FICA) is a 1935 law adopted in the United States. It mandates deducting a payroll tax from an employee’s paycheck and matching contributions from employers. These funds finance government programs such as Social Security and Medicare.
Individuals’ Federal Insurance Contribution Act (FICA) contributions not only cover their current benefits but also serve as an investment for future benefits.
To account for FICA contributions, the total gross pay of a wage worker is decreased by an amount precisely proportional to the total gross income.
Employers match dollar-for-dollar the FICA tax contributions of their employees.
There is no way to avoid paying FICA taxes if you have a job.
Since the 1930s, the Federal Insurance Contributions Act (FICA) has been used to fund Social Security services for retirees, children, surviving spouses, and the disabled.
FUTA - Federal Unemployment Tax Act
As a consequence of the Federal Unemployment Tax Act, a payroll tax must be paid by every business. The funds are distributed to the respective state unemployment insurance programs, which in turn provide benefits to individuals who are currently jobless.
Starting in 2021, the Federal Unemployment Tax Act (FUTA) tax rate will be 6% of the first $7,000 paid to each employee each year.
Even though the FUTA payroll tax is based on an employee’s earnings, only employers have to pay it.
What about "Sin Taxes"?
In no way, shape, or form a “sin tax” is the same as a municipal, state, or federal fee. Instead, it is a slang phrase for the many degrees of government excise taxes levied on things considered dangerous by the Amish, such as alcoholic drinks, tobacco products other than mild cigars, and gambling.
Most Amish people do not purchase such items because they contradict their religious convictions. As a result, they avoid making the legally required tax contributions.
The New Order Amish have a strict no-substances policy prohibiting alcoholic beverages and tobacco products. Because the average New Order Amish individual does not purchase tobacco or alcohol during the year, they are not subject to “sin taxes.”
Tax on Consumer Goods
In our country, a consumption tax is a charge you pay when you buy goods or services that are taxed and used to fund public services.
The state and federal taxes levied on gasoline for your car exemplify this. Amish people are exempt from this levy because they do not own cars and do not use gasoline. The Amish are a problem because they use the highways without paying the taxes that support road infrastructure initiatives. These taxes are collected through the use of fuel taxes.
Many believe it is unfair because Amish do not contribute to road maintenance or development and that Amish buggies cause far more damage than cars. In addition, Amish buggies are heavy and bulky, making them difficult to drive.
In some states, including Ohio, owners must register every Amish buggy. The registration fee is then applied to general road maintenance. However, this is fine in some states.
There's An Application Process for exemption
It doesn’t mean you’ll automatically be exempt if you’re Amish. According to the IRS, any Amish member must participate in an extensive exemption filing. If you’re willing to qualify, you’ll need to supply the IRS certification and acknowledgment for not receiving any social security benefits or other public insurance from the U.S. government.
Have members of the Amish community been issued Social Security numbers?
As soon as a person becomes a member of the Amish church, they can forgo obtaining social security benefits. However, some Amish are still forced to make payments into the social security system.
- When working for a boss who is not of the Amish faith.
- While working with persons who are not Amish.
- To become members of the Amish church, prospective converts must first undergo circumcision.
Because it is against the Amish people’s religion to use insurance, which is precisely what social security is: insurance for the future, Amish do not qualify for unemployment, social security, or welfare benefits. This is an important fact to keep in mind.
One of the critical reasons for this is that Amish children and communities care for people of all ages, regardless of their social status. As a result, someone elderly will continue to receive care from their family, even as they age. Of course, they’ll become less able to work as strenuously as they once did and consequently require more assistance, but on these farms, this is a typical case, and caring for the elderly is the right thing to do. For some people, the idea is common, but it remains part of the facts, and the old-order Amish share a different view from some of the rest of the Amish population.
Assisted living facilities are an option for those older adults whose communities cannot offer them the level of care they require in certain circumstances. Amish people, especially men, work hard during their lives, ensuring they care for each other when they get older. In conclusion, Amish people live a humble life.
Reach out to one of our certified Tax Professionals
If you’re Amish, you are eligible for a tax advantage, meaning you have the right to certain exemptions. Local laws state their comments about the needs of Amish in terms of tax liability, and certain things like child tax credits might be claimed.
We understand that Amish groups want to live a particular lifestyle, and the IRS sometimes interferes with people simply living on a farm on their land. However, there are tax rules and amounts you will pay, and the IRS wants these families to pay property taxes on their ‘assets.’ In some cases, according to the area you live in, you might be exempt from things like state income taxes.
Ideal tax can assist you with a list of services and negotiate with the IRS to get you the clarity you deserve. Reach out to one of our certified tax professionals to get a free first consultation.