Publication 51 - Circular A, Agricultural Employer's Tax Guide

Publication 51

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When there are discrepancies between amounts reported on Form 943 filed with the IRS and Forms W-2 and W-3 filed with the SSA, the IRS must contact you to resolve the discrepancies.

To help reduce discrepancies:

Report bonuses as wages and as social security and Medicare wages on Forms W-2 and 943;
Report social security and Medicare wages and taxes separately on Forms W-2, W-3, and 943;
Report social security taxes on Form W-2 in the box for social security tax withheld (box 4), not as social security wages;
Report Medicare taxes on Form W-2 in the box for Medicare tax withheld (box 6), not as Medicare wages;
Make sure that social security wages for each employee do not exceed the annual social security wage base; and
Do not report noncash wages that are not subject to social security or Medicare taxes as social security or Medicare wages.

To reduce the discrepancies between amounts reported on Forms W-2, W-3, and 943:

Be sure that the amounts on Form W-3 are the total amounts from Forms W-2, excluding any amounts from Forms W-2 that were marked void, and
Reconcile Form W-3 with your Form 943 by comparing amounts reported for the following items.

Federal income tax withholding, social security wages, and Medicare wages.
Social security and Medicare taxes. Generally the amounts shown on Form 943, including current year adjustments, should be approximately twice the amounts shown on Form W-3.

Amounts reported on Forms W-2, W-3, and 943 may not match for valid reasons. If they do not match, you should determine that the reasons are valid. Keep your reconciliation so that you will have a record of why amounts did not match in case there are inquiries from the IRS or the SSA.

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12. How Do Employment Taxes Apply to Farmwork?

Type of employment	Income Tax Withholding, Social Security, and Medicare (including Additional Medicare Tax when wages are paid in excess of $200,000)	Federal Unemployment Tax
Farm Employment Includes:
1. Cultivating soil; raising or harvesting any agricultural or horticultural commodity; the care of livestock, poultry, bees, fur-bearing animals, or wildlife.	Taxable if $150 test or $2,500 test is met. See section 4.	Taxable if either test in section 10 is met.
2. Work on a farm if major farm duties are in management or maintenance, etc., of farm tools or equipment or salvaging timber, or clearing brush or other debris, left by hurricane.
3. Work in connection with the production and harvesting of turpentine and other oleoresinous products.
4. Cotton ginning.
5. Operating or maintenance of ditches, reservoirs, canals, or waterways used only for supplying or storing water for farming purposes and not owned or operated for profit.
6. Processing, packaging, etc., any commodity in its unmanufactured state if employed by farm operator who produced over half of commodity processed or by group of up to 20 unincorporated farm operators if they produced all the commodity.
7. Hatching poultry on a farm.*
8. Production or harvesting of maple syrup.
Farm Employment Does Not Include:
1. Handling or processing commodities after delivery to terminal market for commercial canning or freezing.	Taxable under general employment rules. Farm rules do not apply.	Taxable under general FUTA rules. Farm rules do not apply.
2. Operating or maintenance of ditches, canals, reservoirs or waterways not meeting tests in (5) above.
3. Processing, packaging, delivering, etc., any commodity in its unmanufactured state if group of farm operators do not meet the tests in (6) above.
4. Household employment.
Special Employment Situations:
1. Services not in the course of employer's trade or business on farm operated for profit (cash payments only).	Taxable if $150 test or $2,500 test is met (see section 4), unless performed by parent employed by child.	Taxable only if $50 or more is paid in a quarter and employee works on 24 or more different days in current or prior quarter.
2. Workers admitted under section 101(a)(15)(H)(ii)(a) of the Immigration and Nationality Act on a temporary basis to perform agricultural labor ("H-2A" workers).	Exempt.	Exempt.
3. Family employment.	Exempt for employer's child under age 18, but counted for $150 test or $2,500 test. Taxable for spouse of employer.	Exempt if services performed by employer's parent or spouse or by employer's child under age 21.
*Hatching poultry off the farm is not considered farmwork for income tax withholding, social security, and Medicare. It is considered farmwork for federal unemployment tax.

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11. Reconciling Wage Reporting Forms(p21)