Publication 80 - Federal Tax Guide (Circular Ss) - Internal Revenue Service - 2012 Page 8
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25You are responsible for the employer social security tax
l a n d . F o r d e t a i l s , s e e R e g u l a t i o n s s e c t i o n
on wages and tips until the wages (including tips) reach the
31.3121(b)(16)-1.
wage base limit. You are responsible for the employer
The $150 Test or the $2,500 Test
Medicare tax for the whole year on all wages and tips. File
Form 941-SS (or Form 944-SS) to report withholding and
employer taxes on tips.
All cash wages that you pay to any employee for farmwork
are subject to social security and Medicare taxes if either of
Ordering rule. If, by the 10th of the month after the
the following two tests is met.
month you received an employee’s report on tips, you do
•
not have enough employee funds available to deduct the
You pay cash wages to the employee of $150 or
employee social security and Medicare tax on tips, you no
more in a year (count all cash wages paid on a time,
longer have to collect it and are not liable for it.
piecework, or other basis) for farmwork. The $150
test applies separately to each farmworker that you
Reporting tips. Report tips and any collected and uncol-
employ. If you employ a family of workers, each
lected social security and Medicare taxes in boxes 1, 5, 7,
member is treated separately. Do not count wages
and 12 on Forms W-2AS, W-2CM, W-2GU, or Form W-2VI
paid by other employers.
and on Form 941-SS, lines 5b and 5c (Form 944-SS, lines
•
The total that you pay for farmwork (cash and non-
4b and 4c). Report an adjustment on Form 941-SS, line 9
cash) to all of your employees is $2,500 or more
(Form 944-SS, line 6), for the uncollected social security
during the year.
and Medicare taxes. The table in
section 12
shows how
tips are treated for FUTA tax purposes.
Exceptions. The $150 and $2,500 tests do not apply to
You are permitted to establish a system for elec-
wages that you pay to a farmworker who receives less than
TIP
tronic tip reporting by employees. See Regula-
$150 in annual cash wages and the wages are not subject
tions section 31.6053-1(d).
to social security and Medicare taxes even if you pay
$2,500 or more in that year to all of your farmworkers if the
farmworker:
6. Social Security and Medicare
•
Is employed in agriculture as a hand-harvest laborer,
Taxes for Farmworkers
•
Is paid piece rates in an operation that is usually
paid on a piece-rate basis in the region of employ-
ment,
The tests described below apply only to services that are
defined as agricultural labor (farmwork). In general, you
•
Commutes daily from his or her home to the farm,
are an employer of farmworkers if your employees:
and
•
Raise or harvest agricultural or horticultural products
•
Had been employed in agriculture less than 13
on your farm (including the raising and feeding of
weeks in the preceding calendar year.
livestock);
•
Amounts that you pay to these seasonal farmworkers,
Work in connection with the operation, management,
however, count toward the $2,500-or-more test to deter-
conservation, improvement, or maintenance of your
mine whether wages that you pay to other farmworkers are
farm and its tools, equipment;
subject to social security and Medicare taxes.
•
Provide services relating to salvaging timber, or
clearing land of brush and other debris, left by a
hurricane (also known as hurricane labor);
7. How To Figure Social
•
Handle, process, or package any agricultural or hor-
Security and Medicare Taxes
ticultural commodity if you produced over half of the
commodity (for a group of up to 20 unincorporated
operators, all of the commodity); or
The employee tax rate for social security is 4.2% on wages
paid and tips received before March 1, 2012. The em-
•
Do work for you related to cotton ginning, turpentine,
ployee tax rate for social security increases to 6.2% on
gum resin products, or the operation and mainte-
wages paid and tips received after February 29, 2012. The
nance of irrigation facilities.
employer tax rate for social security remains unchanged at
6.2%. The social security wage base limit is $110,100.The
For this purpose, the term “farm” includes stock, dairy,
2012 employee tax rate for Medicare is 1.45% (amount
poultry, fruit, fur-bearing animal, and truck farms, as well
withheld) each for the employee and employer (2.9% to-
as plantations, ranches, nurseries, ranges, greenhouses
tal). There is no wage base limit for Medicare tax; all
or other similar structures used primarily for the raising of
covered wages are subject to Medicare tax. Multiply each
agricultural or horticultural commodities, and orchards.
wage payment by these percentages to figure the tax to
Farmwork does not include reselling activities that do not
withhold from employees. Employers report both the em-
involve any substantial activity of raising agricultural or
ployee and employer shares on Form 941-SS, 944-SS, or
horticultural commodities, such as a retail store or a green-
Form 943 (farm employment). See
section 5
for informa-
house used primarily for display or storage.
tion on tips.
A “share farmer” working for you is not your employee.
However, the share farmer may be subject to
At the time this publication was prepared for re-
!
self-employment tax. In general, share farming is an ar-
lease, the rate for the employee’s share of social
rangement in which certain commodity products are
security tax was 4.2% and scheduled to increase
CAUTION
shared between the farmer and the owner (or tenant) of the
to 6.2% for wages paid after February 29, 2012. However,
Page 8
Publication 80 (2012)
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