Table of Contents
- What's New for 2011
- What's New for 2012
- Reminder
- Important Dates for 2012
- Introduction
- Topics - This chapter discusses:
- Useful Items - You may want to see:
- Farm Employment
- Family Employees
- Crew Leaders
- Social Security and Medicare Taxes
- Federal Income Tax Withholding
- Required Notice to Employee About Earned Income Credit (EIC)
- Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes
- Federal Unemployment (FUTA) Tax
Social security and Medicare tax for 2011. The employee tax rate for social security is 4.2%. The employer tax rate for social security remains unchanged at 6.2%. The Medicare tax rate is 1.45% each for employers and employees.Do not withhold or pay social security tax after an employee reaches $106,800 in social security wages for the year. There is no limit on the amount of wages subject to Medicare tax.
Qualified employer's social security tax exemption expired. The qualified employer's exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees expired on December 31, 2010.
Advance payment of earned income credit (EIC). The option of receiving advance payroll payments of EIC expired on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return.
Federal tax deposits must be made by electronic funds transfer. Beginning January 1, 2011, you must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010. Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make deposits on your behalf. Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. EFTPS is a free service provided by the Department of Treasury. Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee.For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A), Agricultural Employer's Tax Guide. To get more information about EFTPS or to enroll in EFTPS, visit www.eftps.gov or call 1-800-555-4477. Additional information about EFTPS is also available in Publication 966, The Secure Way to Pay Your Federal Taxes.
Social security and Medicare tax for 2012. The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2012 will be discussed in the December 2011 revision of Publication 51 (Circular A).The Medicare tax rate is 1.45% each for employers and employees. There is no limit on the amount of wages subject to Medicare tax.
Correcting a previously filed Form 943. If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Form 943-X is filed separately from Form 943. For more information on correcting Form 943, see the Instructions for Form 943-X.
You should take the action indicated by the dates listed. See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. For these dates, see Publication 509, Tax Calendars (For use in 2012).
Note. If any date shown below for filing a return, furnishing a form, or depositing taxes, falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. For any due date, you will meet the “file” or “furnish” date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U.S. Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. See Private delivery services in Publication 51 (Circular A).Beginning January 1, 2011, federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. Statewide holidays no longer apply. For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A).
Fiscal year taxpayers. Generally, the due dates listed apply whether you use a calendar or a fiscal year. However, if you have a fiscal year, refer to Publication 509 for certain exceptions that may apply to you.
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File Form 943 with the Internal Revenue Service. If you deposited all Form 943 taxes when due, you have 10 additional days to file.
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Furnish each employee with a completed Form W-2, Wage and Tax Statement.
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Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC).
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File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the Internal Revenue Service. If you deposited all the FUTA tax when due, you have 10 additional days to file.
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File Form 945, Annual Return of Withheld Federal Income Tax, to report any nonpayroll income tax withheld during 2011.
By February 15. Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year.
On February 16. Begin withholding federal income tax for any employee who previously claimed exemption from federal income tax withholding but has not given you a new Form W-4 for the current year. If the employee does not give you a new Form W-4, withhold as if he or she is single, with zero withholding allowances. The Form W-4 previously given to you claiming exemption is now expired.
By February 28. File Forms 1099 and 1096. File Copy A of all Forms 1099 with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with the IRS. For electronically filed returns, see By March 31 below.
By February 29. File Forms W-2 and W-3. File Copy A of all Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). For electronically filed returns, see By March 31 below.
By March 31. File electronic Forms W-2 and 1099. File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. See Social Security's Employer W-2 Filing Instructions & Information webpage at www.socialsecurity.gov/employer for more information about filing Forms W-2 and W-2c electronically.
By April 30, July 31, October 31, and January 31. Deposit FUTA taxes. Deposit FUTA tax due if it is more than $500.
Before December 1. Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year.
You are generally required to withhold federal income tax from the wages of your employees. You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). This chapter includes information about these taxes.
You must also pay self-employment tax on your net earnings from farming. See chapter 12 for information on self-employment tax.
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Farm employment
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Family employees
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Crew leaders
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Social security and Medicare taxes
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Federal income tax withholding
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Advance payment of earned income credit
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Reporting and paying social security, Medicare, and withheld federal income taxes
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FUTA tax
Publication
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15 (Circular E), Employer's Tax Guide
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15-A Employer's Supplemental Tax Guide
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15-B Employer's Tax Guide to Fringe Benefits
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51 (Circular A), Agricultural Employer's Tax Guide
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926 Household Employer's Tax Guide
Form (and Instructions)
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W-2 Wage and Tax Statement
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W-4 Employee's Withholding Allowance Certificate
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W-9 Request for Taxpayer Identification Number and Certification
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940 Employer's Annual Federal Unemployment (FUTA) Tax Return
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943 Employer's Annual Federal Tax Return for Agricultural Employees
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943-X Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund
See chapter 16 for information about getting publications and forms.
In general, you are an employer of farmworkers if your employees do any of the following types of work.
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Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock.
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Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment.
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Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor).
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Handling, processing, or packaging any agricultural or horticultural commodity if you produced more than half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity).
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Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities.
For more information, see Publication 51 (Circular A).
Workers are generally your employees if they perform services subject to your control. You do not have to withhold or pay employment taxes for independent contractors who are not your employees. For more information, see Publication 15-A.
If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee.
Special rules apply to crew leaders. See Crew Leaders , later.
Form I-9 is also available from the USCIS website at www.uscis.gov. You can also contact the USCIS at 1-800-375-5283 for more information.
www.acf.hhs.gov/programs/cse/newhire for more information.
Generally, the wages you pay to family members who are your employees are subject to employment taxes. However, certain exemptions may apply to wages paid to your child, spouse, or parent.
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A corporation, even if it is controlled by you.
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A partnership, even if you are a partner. This does not apply to wages paid to your child if each partner is a parent of the child.
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An estate or trust, even if it is the estate of a deceased parent.
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You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter.
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You are a widow or widower; or divorced and not remarried; or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter.
chapter 12.
If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers.
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The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor.
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The crew leader has not entered into a written agreement with the farmer under which the crew leader is designated as an employee of the farmer.
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The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act.
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Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer.
All cash wages you pay to an employee during the year for farmwork are subject to social security and Medicare taxes if you meet either of the following tests.
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You pay the employee $150 or more in cash wages (count all wages paid on a time, piecework, or other basis) during the year for farmwork (the $150 test). The $150 test applies separately to each farmworker that you employ. If you employ a family of workers, each member is treated separately. Do not count wages paid by other employers.
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You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test).
If the $2,500 test for the group is not met, the $150 test for an employee still applies.
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Works as a hand-harvest laborer,
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Is paid piece rates in an operation usually paid on this basis in the region of employment,
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Commutes daily from his or her permanent home to the farm, and
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Worked in agriculture less than 13 weeks in the preceding calendar year.
www.socialsecurity.gov.
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The employee pays 4.2% of cash wages for social security tax (old-age, survivors, and disability insurance).
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The employer pays 6.2% of cash wages for social security tax (old-age, survivors, and disability insurance).
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The employer and employee each pay 1.45% of cash wages for Medicare tax (hospital insurance).
Example.
Jane operates a small family fruit farm. She employs day laborers in the picking season to enable her to timely get her crop to market. She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. When her accountant, Susan, prepares the employees' Forms W-2, she adds each employee's share of social security and Medicare taxes paid by Jane to the employee's wage income (box 1 of Form W-2), but does not include it in box 3 (social security wages) or box 5 (Medicare wages and tips).
For 2011, Jane paid Mary $1,000 during the year. Susan enters $1,056.50 in box 1 of Mary's Form W-2 ($1,000 wages plus $56.50 social security and Medicare taxes paid for Mary). She enters $1,000 in boxes 3 and 5.
If the cash wages you pay to farmworkers are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc.
You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. You meet the notification requirement by giving each employee any of the following.
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Form W-2, which contains EIC notification on the back of Copy B.
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A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2.
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Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC).
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Your own written statement with the exact wording of Notice 797.
For more information, see Publication 51 (Circular A).
You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. You must also pay the employer's share of social security and Medicare taxes.
Form 943. Your 2011 Form 943 is due by January 31, 2012 (or February 10, 2012, if you made deposits on time in full payment of the taxes due for the year).
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The date the employee requests the form.
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The date you make your final payment of wages to the employee.
You must pay FUTA tax if you meet either of the following tests.
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You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year.
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You employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year.
These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. See Family Employees , earlier.
The FUTA tax is imposed on you as the employer. It must not be collected or deducted from the wages of your employees.
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