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IRS.gov Website
Publication 225
taxmap/pubs/p225-058.htm#en_us_publink1000218816

Social Security and Medicare Taxes(p80)

rule
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.
If the $2,500 test for the group is not met, the $150 test for an employee still applies.
taxmap/pubs/p225-058.htm#en_us_publink1000218817

Exceptions.(p80)

rule
Annual cash wages of less than $150 you pay to a seasonal farmworker are not subject to social security and Medicare taxes, even if you pay $2,500 or more to all your farmworkers. However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes.
A seasonal farmworker is a worker who:
See Family Employees, earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent.
taxmap/pubs/p225-058.htm#en_us_publink1000218818
Religious exemption.(p80)
An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. This exemption is available only if both the employee and the employer are members of the group or division.
For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.
taxmap/pubs/p225-058.htm#en_us_publink1000218819

Cash wages.(p80)

rule
Only cash wages paid to farmworkers are subject to social security and Medicare taxes. Cash wages include checks, money orders, and any kind of money or cash.
Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www.socialsecurity.gov.
taxmap/pubs/p225-058.htm#en_us_publink1000218820

Noncash wages.(p80)

rule
Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. However, they are subject to these taxes if the substance of the transaction is a cash payment. For information on lodging provided as a condition of employment, see Publication 15-B.
Report the value of noncash wages in box 1 of Form W-2 together with cash wages. Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment).
taxmap/pubs/p225-058.htm#en_us_publink1000218821

Tax rates and social security wage limit.(p80)

rule
For 2013, the employer and the employee will pay the following taxes.
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Wage limit.(p80)
The limit on wages subject to the social security tax for 2013 is $113,700. There is no limit on wages subject to the Medicare tax. All covered wages are subject to the Medicare tax. Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding.
taxmap/pubs/p225-058.htm#en_us_publink1000218823

Paying employee's share.(p80)

rule
If you would rather pay the employee's share of social security and Medicare taxes without deducting it from his or her wages, you may do so. It is additional income to the employee. You must include it in box 1 of the employee's Form W-2, but do not count it as social security and Medicare wages (boxes 3 and 5 on Form W-2) or as wages for federal unemployment (FUTA) tax purposes.
taxmap/pubs/p225-058.htm#en_us_publink1000218824

Example.(p80)

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 2013, Jane paid Mary $1,000 during the year. Susan enters $1,076.50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76.50 social security and Medicare taxes paid for Mary). She enters $1,000 in boxes 3 and 5 of Mary's Form W-2.
taxmap/pubs/p225-058.htm#en_us_publink1000196057

Additional Medicare Tax.(p80)

rule
In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold.
For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E). For more information on Additional Medicare Tax, visit IRS.gov and enter "Additional Medicare Tax" in the search box.