Can Certain Individuals Evade Tax Obligations?

In the United States, the Internal Revenue Service (IRS) governs taxation, and the 16th Amendment to the Constitution grants Congress the power to levy taxes on income. However, there are certain population groups and activities that are exempt from paying federal income tax.

One such group is churches, considered public charities under U.S. tax laws, which are tax-exempt. Charitable organizations, also known as Section 501(c)(3) groups, are allowed to promote religion as their charitable work.

Another unique case is the Amish community. They do not pay into the Social Security system, are exempt from using Social Security benefits, and are also exempt from paying Social Security and Medicare taxes. Furthermore, the Amish community does not accept welfare or unemployment benefits.

Railroad workers, on the other hand, are subject to a separate and distinct set of taxes outlined by the Railroad Retirement Act. These taxes fund their retirement and unemployment benefits. The Railroad Retirement Board, an agency working independently of the government, administers these benefits, working closely with the Social Security Administration.

Self-employed individuals who earn less than $400 are exempt from paying income taxes. Additionally, dependents, some disabled persons, and Social Security recipients with certain income levels are also exempt.

In 2022, 57% of tax-filing households did not pay any federal income tax, which was a significant increase from the 44% before the pandemic. However, in 2023, the Center estimated that just 40% of households would not pay taxes, due to the expiration of COVID-related tax credits and a strong job market.

The determination of which population groups in the USA are exempt from income tax in 2023 is governed by rules set out in the Internal Revenue Code and IRS regulations. These specify exemptions based on income level, age, filing status, and other criteria. The exact 2023 provisions require consulting IRS publications or the tax code directly.

In the 2022 tax year (2023), single individuals under the age of 65 with yearly income less than $12,950 were exempt from paying taxes. Married couples filing jointly, with both spouses under 65, and income less than $25,900 were also exempt. Heads of households earning less than $19,400 (if under 65) and less than $21,150 (if 65 or older) were exempt as well.

These exemptions and the unique cases of churches, railroad workers, and the Amish community demonstrate the complexity and nuance of the U.S. tax system. It's essential for individuals to understand their tax obligations and potential exemptions to ensure compliance and maximise their financial benefits.