Publication 80 - Circular Ss - Department Of The Treasury (Page 7 of 24) in pdf

You are responsible for the employer social security tax

test applies separately to each farmworker that you

on wages and tips until the wages (including tips) reach

employ. If you employ a family of workers, each

the wage base limit. You are responsible for the employer

member is treated separately. Do not count wages

Medicare tax for the whole year on all wages and tips. File

paid by other employers.

Form 941-SS to report withholding on tips.

•

The total that you pay for farmwork (cash and non-

If, by the 10th of the month after the month you received

cash) to all of your employees is $2,500 or more

an employee’s report on tips, you do not have enough

during the year.

employee funds available to deduct the employee tax, you

no longer have to collect it. Show these tips and any

uncollected social security and Medicare taxes on Forms

Exceptions. The $150 and $2,500 tests do not apply to

W-2VI, W-2GU, W-2AS, or W-2CM and on lines 6c, 6d, 7a,

the following:

and 7b of Form 941-SS. Report an adjustment on line 9 of

1) Wages that you pay to a farmworker who receives

Form 941-SS for the uncollected social security and Medi-

less than $150 in annual cash wages are not subject

care taxes.

to social security or Medicare taxes even if you pay

Note: You are permitted to establish a system for elec-

$2,500 or more in that year to all your farmworkers if

tronic tip reporting by employees. See Regulations section

the farmworker:

31.6053-1.

a) Is employed in agriculture as a hand-harvest la-

The table on page 20 shows how tips are treated for

borer,

FUTA tax purposes.

b) Is paid piece rates in an operation that is usually

paid on a piece-rate basis in the region of em-

6. Social Security and Medicare

ployment,

c) Commutes daily from his or her home to the farm,

Taxes for Farmworkers

and

The tests described below apply only to services that are

d) Was employed in agriculture less than 13 weeks

defined as agricultural labor (farmwork). Farmworkers are

in the preceding calendar year.

your employees if they:

Amounts that you pay to these seasonal

•

Raise or harvest agricultural or horticultural products

f a r m w o r k e r s ,

h o w e v e r ,

c o u n t

t o w a r d

t h e

on your farm.

$2,500-or-more test to determine whether wages that

•

you pay to other farmworkers are subject to social

Work in connection with the operation, management,

security and Medicare taxes.

conservation, improvement, or maintenance of your

farm and its tools and equipment.

2) Cash wages that you pay to a household employee

•

are counted in the $2,500 test but are not subject to

Handle, process, or package any agricultural or hor-

social security and Medicare taxes unless you have

ticultural commodity if you produced over half of the

paid the worker $1,400 or more in cash wages in

commodity (for an unincorporated group of up to 20

2003 ($1,400 in 2004). See Household workers in

operators, all of the commodity).

the table on page 18 showing liability for social se-

•

Do work for you related to cotton ginning, turpentine,

curity, Medicare, and FUTA taxes.

or gum resin products.

•

Do housework in your private home if it is on a farm

that is operated for profit.

7. How To Figure Social

A share farmer working for you is not your employee.

Security and Medicare Taxes

However, the share farmer may be subject to self-employ-

ment tax. In general, share farming is an arrangement in

For wages paid in 2004, the social security tax rate is 6.2%

which certain commodity products are shared between the

and the Medicare tax rate is 1.45% for both the employer

farmer and the owner (or tenant) of the land. For details,

and the employee. Multiply each wage payment by these

see Regulations section 31.3121(b)(16)-1.

percentages to figure the tax. For example, the social

security tax on a wage payment of $355 would be $22.01

The $150 Test or the $2,500 Test

($355 × .062) each. The Medicare tax would be $5.15

($355 × .0145) each. (See section 5 for information on

All cash wages that you pay for farmwork are subject to

tips.)

social security and Medicare taxes if either of the two tests

below is met:

Note: Deduct the employee tax from each wage pay-

•

You pay cash wages to the employee of $150 or

ment. If you are not sure that the wages that you pay to a

farmworker during the year will be taxable, you may either

more in a year (count all cash wages paid on a time,

piecework, or other basis) for farmwork. The $150

deduct the tax when you make the payments or wait until

Page 7

Publication 80 - Circular Ss - Department Of The Treasury Page 7

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