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Publication 225

Chapter 13
Employment Taxes(p76)

What's New for 2011(p76)

Social security and Medicare tax for 2011.(p76)
The employee tax rate for social security is 4.2%. The employer tax rate for social security remains unchanged at 6.2%. The Medicare tax rate is 1.45% each for employers and employees.
Do not withhold or pay social security tax after an employee reaches $106,800 in social security wages for the year. There is no limit on the amount of wages subject to Medicare tax.
Qualified employer's social security tax exemption expired.(p76)
The qualified employer's exemption for their share (6.2%) of social security tax on wages/tips paid to qualified employees expired on December 31, 2010.
Advance payment of earned income credit (EIC).(p76)
The option of receiving advance payroll payments of EIC expired on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return.
Federal tax deposits must be made by electronic funds transfer.(p76)
Beginning January 1, 2011, you must use electronic funds transfer to make all federal tax deposits (such as deposits of employment tax, excise tax, and corporate income tax). Forms 8109 and 8109-B, Federal Tax Deposit Coupon, cannot be used after December 31, 2010. Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make deposits on your behalf. Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. EFTPS is a free service provided by the Department of Treasury. Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee.
For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A), Agricultural Employer's Tax Guide. To get more information about EFTPS or to enroll in EFTPS, visit or call 1-800-555-4477. Additional information about EFTPS is also available in Publication 966, The Secure Way to Pay Your Federal Taxes.

What's New for 2012(p76)

Social security and Medicare tax for 2012.(p76)
The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2012 will be discussed in the December 2011 revision of Publication 51 (Circular A).
The Medicare tax rate is 1.45% each for employers and employees. There is no limit on the amount of wages subject to Medicare tax.


Correcting a previously filed Form 943.(p76)
If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Form 943-X is filed separately from Form 943. For more information on correcting Form 943, see the Instructions for Form 943-X.

Important Dates for 2012(p76)

You should take the action indicated by the dates listed. See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. For these dates, see Publication 509, Tax Calendars (For use in 2012).
If any date shown below for filing a return, furnishing a form, or depositing taxes, falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. For any due date, you will meet the "file" or "furnish" date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U.S. Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. See Private delivery services in Publication 51 (Circular A).
Beginning January 1, 2011, federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. Statewide holidays no longer apply. For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A).
Fiscal year taxpayers.(p76)
Generally, the due dates listed apply whether you use a calendar or a fiscal year. However, if you have a fiscal year, refer to Publication 509 for certain exceptions that may apply to you.
By January 31(p76)
  • File Form 943 with the Internal Revenue Service. If you deposited all Form 943 taxes when due, you have 10 additional days to file.
  • Furnish each employee with a completed Form W-2, Wage and Tax Statement.
  • Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC).
  • File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the Internal Revenue Service. If you deposited all the FUTA tax when due, you have 10 additional days to file.
  • File Form 945, Annual Return of Withheld Federal Income Tax, to report any nonpayroll income tax withheld during 2011.
By February 15(p77)
Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year.
On February 16(p77)
Begin withholding federal income tax for any employee who previously claimed exemption from federal income tax withholding but has not given you a new Form W-4 for the current year. If the employee does not give you a new Form W-4, withhold as if he or she is single, with zero withholding allowances. The Form W-4 previously given to you claiming exemption is now expired.
By February 28(p77)
File Forms 1099 and 1096. File Copy A of all Forms 1099 with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with the IRS. For electronically filed returns, see By March 31 below.
By February 29(p77)
File Forms W-2 and W-3. File Copy A of all Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). For electronically filed returns, see By March 31 below.
By March 31(p77)
File electronic Forms W-2 and 1099. File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. See Social Security's Employer W-2 Filing Instructions & Information webpage at for more information about filing Forms W-2 and W-2c electronically.
By April 30, July 31, October 31, and
January 31(p77)
Deposit FUTA taxes. Deposit FUTA tax due if it is more than $500.
Before December 1(p77)
Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year.


You are generally required to withhold federal income tax from the wages of your employees. You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). This chapter includes information about these taxes.
You must also pay self-employment tax on your net earnings from farming. See chapter 12 for information on self-employment tax.


Useful items

You may want to see:

 15 (Circular E), Employer's Tax Guide
 15-A Employer's Supplemental Tax Guide
 15-B Employer's Tax Guide to Fringe Benefits
 51 (Circular A), Agricultural Employer's Tax Guide
 926 Household Employer's Tax Guide
Form (and Instructions)
 W-2: Wage and Tax Statement
 W-4: Employee's Withholding Allowance Certificate
 W-9: Request for Taxpayer Identification Number and Certification
 940: Employer's Annual Federal Unemployment (FUTA) Tax Return
 943: Employer's Annual Federal Tax Return for Agricultural Employees
 943-X: Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund
See chapter 16 for information about getting publications and forms.

Farm Employment(p77)

In general, you are an employer of farmworkers if your employees do any of the following types of work. For more information, see Publication 51 (Circular A).
Workers are generally your employees if they perform services subject to your control. You do not have to withhold or pay employment taxes for independent contractors who are not your employees. For more information, see Publication 15-A.
If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee.
Special rules apply to crew leaders. See Crew Leaders, later.

Employer identification number (EIN).(p77)

If you have employees, you must have an EIN. If you do not have an EIN, you may apply for one online. Go to and click on the Apply for an Employer Identification Number (EIN) Online link. You may also apply for an EIN by calling 1-800-829-4933 (hours of operation are Monday - Friday, 7:00 a.m. to 10:00 p.m. local time), or you can fax or mail Form SS-4, Application for Employer Identification Number, to the IRS.

Employee's social security number (SSN).(p77)

An employee who does not have an SSN should submit Form SS-5, Application for a Social Security Card, to the Social Security Administration (SSA). Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). It is also available from the SSA's website at
The employee must furnish evidence of age, identity, and U.S. citizenship or lawful immigration status permitting employment with the Form SS-5. An employee who is age 18 or older must appear in person with this evidence at an SSA office.

Form I-9.(p77)

You must verify that each new employee is legally eligible to work in the United States. This includes completing the Form I-9, Employment Eligibility Verification. Form I-9 is available from the U.S. Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676.
Form I-9 is also available from the USCIS website at You can also contact the USCIS at 1-800-375-5283 for more information.

New hire reporting.(p77)

You are required to report any new employee to a designated state new hire registry. Many states accept a copy of Form W-4 with employer information added. Call the Office of Child Support Enforcement at 202-401-9267 or visit their Employer Services webpage at for more information.