Publication 80 - (Circular Ss),federal Tax Guide For Employers In The U.s. Virgin Islands, Guam, American Samoa, And The Commonwealth Of The Northern Mariana Islands Page 8
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Had been employed in agriculture less than 13
the deposits either electronically or with paper coupons.
weeks in the preceding calendar year.
These methods are discussed later.
Amounts that you pay to these seasonal farmworkers,
Payment with Return
however, count toward the $2,500-or-more test to deter-
mine whether wages that you pay to other farmworkers are
You may make a payment with Form 941-SS or Form 943
subject to social security and Medicare taxes.
instead of depositing if one of the following applies.
•
You report less than a $2,500 tax liability during the
return period (line 8 of Form 941-SS or line 11 of
7. How To Figure Social
Form 943) and you pay in full with a timely filed
return. However, if you are unsure that you will re-
Security and Medicare Taxes
port less than $2,500, deposit under the rules ex-
plained in this section so that you will not be subject
For wages paid in 2005, the social security tax rate is 6.2%
to failure to deposit penalties.
and the Medicare tax rate is 1.45% for both the employer
•
and the employee. Multiply each wage payment by these
You are a monthly schedule depositor and make a
percentages to figure the tax to withhold from employees.
payment in accordance with the Accuracy of Depos-
For example, the social security tax on a wage payment of
its Rule on page 10. This payment may be $2,500 or
$355 would be $22.01 ($355 × .062) each. The Medicare
more.
tax would be $5.15 ($355 × .0145) each. Employers match
these amounts and report both the employee and em-
Only monthly schedule depositors are allowed to
ployer shares on Form 941-SS or Form 943 (farm employ-
!
make an Accuracy of Deposits Rule payment with
ment). See section 5 for information on tips.
the return. Semiweekly schedule depositors must
CAUTION
timely deposit the amount. See Accuracy of Deposits Rule
Note. Deduct the employee tax from each wage pay-
and How To Deposit later in this section.
ment. If you are not sure that the wages that you pay to a
farmworker during the year will be taxable, you may either
When To Deposit
deduct the tax when you make the payments or wait until
the $2,500 test or the $150 test explained in section 6 has
been met.
Note. Under the rules discussed below, the only differ-
Employee’s portion of taxes paid by employer. If you
ence between farm and nonfarm workers’ employment tax
pay your employee’s social security and Medicare taxes
deposit rules is the lookback period. Therefore, farm and
without deducting them from the employee’s pay, you must
nonfarm workers are discussed together except where
include the amount of the payments in the employee’s
noted.
wages for social security and Medicare taxes. This in-
Depending on your total taxes reported during a look-
crease in the employee’s wage payment for your payment
back period (discussed below), you are either a monthly
of the employee’s social security and Medicare taxes is
schedule depositor or a semiweekly schedule depositor.
also subject to employee social security and Medicare
The terms “monthly schedule depositor” and “semi-
taxes. This again increases the amount of the additional
weekly schedule depositor” do not refer to how often you
taxes that you must pay.
pay your employees or how often you are required to make
deposits. The terms identify which set of rules that you
Note. This discussion does not apply to household and
must follow when a tax liability arises (for example, when
agricultural employers. If you pay a household or agricul-
you have a payday).
tural employee’s social security and Medicare taxes, these
You will need to determine your deposit schedule for a
payments must be included in the employee’s wages.
calendar year based on the total employment taxes re-
However, this wage increase due to the tax payments is
ported on line 8 of Form 941-SS (line 10 on pre-2005
not subject to social security or Medicare taxes as dis-
revisions), line 8 of Form 941 (line 11 on pre-2005 revi-
cussed in this section. See Publication 15-A for details.
sions), or line 9 of Form 943 for your lookback period
(defined below). If you filed both Forms 941-SS and 941
Sick pay payments. Social security and Medicare taxes
during the lookback period, combine the tax liabilities for
apply to most payments of sick pay, including payments
these returns for purposes of determining your deposit
made by third parties such as insurance companies. For
schedule. Determine your deposit schedule for Form 943
details on third-party payers of sick pay, see Publication
separately from Forms 941-SS and 941.
15-A.
Lookback period for employers of nonfarm workers.
The lookback period for Form 941-SS (or Form 941) con-
8. Deposit Requirements
sists of four quarters beginning July 1 of the second pre-
ceding year and ending June 30 of the prior year. These
You must deposit social security and Medicare taxes if
four quarters are your lookback period even if you did not
your tax liability (line 8 of Form 941-SS or line 11 of Form
report any taxes for any of the quarters. For 2005, the
943) is $2,500 or more for the tax return period. You make
lookback period is July 1, 2003, through June 30, 2004.
Page 8
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