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What Is a Social Security Exemption?

A Social Security exemption is permission granted by the United States federal government to certain groups of people to abstain from paying Social Security taxes.
A Social Security benefits application.
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  • Written By: Jim B.
  • Edited By: M. C. Hughes
  • Last Modified Date: 24 October 2014
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A Social Security exemption is permission granted by the United States federal government to certain groups of people to abstain from paying Social Security taxes. These taxes are paid by a vast majority of income-earning Americans as a way of funding the Social Security program, which is used to provide benefits for the elderly once they are past normal working age. Among the groups included are non-resident aliens who work in specific tasks, student employees at colleges and universities, and medical students performing their residencies. In addition, members of the religious group known as the Amish possess a Social Security exemption.

The United States has several social insurance programs designed to provide benefits for those who may not be able to afford them otherwise. Among these are Medicare and Medicaid, which provide medical benefits to the elderly and the poor, respectively. Social Security is meant to fund those people who have become too old to earn money for themselves via work. This program is funded through taxes on both the people who earn some sort of income and the people who employ them.

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In some cases, however, certain groups can be granted a Social Security exemption by the Internal Revenue Service, or IRS. As opposed to most people who have Social Security taxes automatically withheld from their income each week, the people with exemptions are allowed to keep the amount usually deducted in their pay. Since this is so, a Social Security exemption can be of great financial benefit for those who qualify.

There are a few groups who qualify for a Social Security exemption and, therefore, must alert the IRS about their eligibility. University employees are eligible for the exemption as long as their primary focus at the university is being a student. Non-resident foreigners working in the United States for foreign governments, on foreign ships, or those who are working in certain jobs while attending US schools, have an exemption. In addition, medical students currently in the residency stage of their education are exempt from Social Security taxes.

Perhaps the most high-profile case of a group having a Social Security exemption relates to the Amish religious group. The Amish objected to Social Security taxes on the grounds that one of the tenets of their religion is that families should be responsible for the care of their elders. After protracted confrontations between the IRS and the Amish, the 1965 Medicare bill passed by the US Congress included a stipulation that the Amish would be exempt from social insurance taxes.

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