scottmat28
Level 2

That was my conclusion as well, until I stumbled across Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.  Pages 6 and 7 of Pub. 517 address "Members of a Religious Sect".  Towards the end of that section it states

"... The exemption will end if you fail to meet the
eligibility requirements or if the Commissioner of
Social Security determines that the sect or division fails to meet them. You must notify the IRS
within 60 days if you are no longer a member of
the religious group, or if you no longer follow the
established teachings of this group. The exemption will end for the tax year in which you or your
sect/division first fails to meet the eligibility requirements."  

So it looks like if the client ceased to be a member of the Amish sect in October, 2023 then his earnings from self-employment are subject to self-employment taxes for the entire year.  While he missed the stated deadline to notify SSA within 60 days, I see no penalty for late notification.  

While taxwise he doesn't come out quite as good as if he could have claimed part exemption, he still comes out ahead since he now qualifies for earned income credit and the Additional Child Tax credit, which combined exceeds his tax self-employment tax.  (Self-employment income that is exempt from se tax is not considered earned income for EIC and ACTC) so he has lost out on those credits in previous years.)

Thanks, TaxGuyBill, for making me think harder and research more.