Publication 80 - Circular Ss - Department Of The Treasury (Page 5 of 24) in pdf

If you do not have an EIN by the time a return is due and

shows a different name or SSN, file a Form W-2c for the

you are filing a paper return, enter “Applied For” and the

most current year only.

date that you applied for it in the space shown for the

number. If you took over another employer’s business, do

not use that employer’s EIN. Make your check for any

4. Taxable Wages

amount due on a return payable to the “United States

Treasury” and show on it your name (as shown on Form

Generally, all wages are subject to social security and

SS-4), address, kind of tax, period covered, and date that

Medicare tax (and FUTA tax for U.S. Virgin Islands em-

you applied for an EIN.

ployers). However, wages subject to social security tax

You should have only one EIN. If you have more than

and FUTA tax are limited by a wage base amount that you

one, notify the Internal Revenue Service office where you

pay to each employee for the year. After you pay $87,900

file your return. List the EINs that you have, the name and

to an employee in 2004, including tips, do not withhold

address to which each number was assigned, and the

social security tax on any amount that you later pay to the

address of your principal place of business. The IRS will

employee for the year. The wage base for FUTA tax is

tell you which EIN to use.

$7,000 for 2004. All wages are subject to Medicare tax.

For more information, see Pub. 1635, Understanding

The wages may be in cash or in other forms, such as an

Your EIN, or Pub. 583, Starting a Business and Keeping

automobile for personal use. Wages include salaries, va-

Records.

cation allowances, bonuses, commissions, and fringe ben-

efits. It does not matter how payments are measured or

paid.

3. Employee’s Social Security

See the table on pages 16 through 20 for exceptions to

taxes on wages. See sections 5 and 6 for a discussion of

Number (SSN)

how the rules apply to tips and farmworkers.

Social security and Medicare taxes apply to most pay-

An employee’s social security number (SSN) consists of

ments of sick pay, including payments by third parties such

nine digits separated as follows: 000-00-0000. You must

as insurance companies. Special rules apply to the report-

get each employee’s name and SSN because you must

ing of third-party sick pay. For details, see Pub. 15-A.

enter them on the employee’s wage and tax statement,

Determine the value of noncash pay (such as goods,

Form W-2VI, W-2GU, W-2AS, or W-2CM. If you do not

lodging, and meals) by its fair market value. However, see

report the employee’s correct name and SSN, you may

Fringe Benefits below. Except for farmworkers and

owe a penalty. You should ask the employee to show you

household employees, this kind of pay may be subject to

his or her social security card. The employee may show

social security, Medicare, and FUTA taxes.

the card if it is available. You may, but you are not required

Back pay, including retroactive wage increases (but not

to, photocopy the social security card if the employee

amounts paid as liquidated damages), is taxed as ordinary

provides it.

wages in the year paid. For information on reporting back

If an employee does not have a social security card or

pay to the Social Security Administration, see Pub. 957,

needs a new one, the employee should apply for one on

Reporting Back Pay and Special Wage Payments to the

Form SS-5, Application for a Social Security Card, and

Social Security Administration.

submit the necessary documentation. See the back cover

of this publication for information on how to get and where

Travel and business expenses. Payments to your em-

to send the form. The employee must complete and sign

ployee for travel and other necessary expenses of your

Form SS-5; it cannot be filed by the employer. If your

business generally are included in taxable wages if (a)

employee has applied for an SSN but does not have one

your employee is not required to or does not substantiate

when you file his or her Form W-2 and you are filing the

timely those expenses to you with receipts or other docu-

form on paper, enter “Applied For” on the form. When the

mentation or (b) you advance an amount to your employee

employee receives the SSN, file Form W-2c, Corrected

Wage and Tax Statement, to show the employee’s SSN.

for business expenses and your employee is not required

to or does not return timely any amount that he or she does

Note: Record the name and number of each employee

not use for business expenses.

exactly as they appear on his or her social security card. If

the employee’s name is not correct as shown on the card

Sick pay. In general, sick pay is any amount that you pay,

(for example, because of marriage or divorce), the em-

under a plan that you take part in, to an employee because

ployee should request a corrected card from the SSA.

of sickness or injury. These amounts are sometimes paid

Continue to use the old name until the employee shows

by a third party, such as an insurance company. In either

you the new social security card with the new name.

case, these payments are subject to social security, Medi-

Employees who apply for social security cards must

care, and FUTA taxes (U.S. Virgin Islands only). Sick pay

supply proof of age, identity, and citizenship. If they are not

becomes exempt from these taxes after the end of 6

citizens of the United States, they must submit evidence of

calendar months after the calendar month the employee

their alien status.

last worked for the employer. Pub. 15-A explains the em-

ployment tax rules that apply to sick pay, disability benefits,

If your employee is given a new social security card

and similar payments to employees.

following an adjustment to his or her resident status that

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Publication 80 - Circular Ss - Department Of The Treasury Page 5

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