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taxmap/pubs/p225-057.htm#TXMP27df5f39 Chapter 13 Employment Taxes

Employment Tax

taxmap/pubs/p225-057.htm#TXMP4aa5feda What's New for 2007

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Redesigned Form 940.

For 2006, we completely redesigned Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. You will find that the redesigned form and instructions are easier to read and fill out. Also, IRS now can optically scan the form and will capture data more accurately and efficiently than before. Form 940-EZ is no longer available. If you previously filed Form 940-EZ, you must now use the redesigned Form 940.

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Wage limit for social security tax.

The limit on wages subject to the social security tax for 2007 will be published in Publication 51 (Circular A), Agricultural Employer's Tax Guide. There is no limit on wages subject to the Medicare tax.

taxmap/pubs/p225-057.htm#TXMP11db1824 Reminder

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Electronic deposits of taxes.

You must use the Electronic Federal Tax Payment System (EFTPS) to make electronic deposits of all depository tax liabilities you incur in 2007 and thereafter if you deposited more than $200,000 in federal depository taxes in 2005 or you had to use EFTPS in 2006.

See Electronic Federal Tax Payment System (EFTPS) under Reporting and Paying Social Security, Medicare, and Withheld Income Taxes.

taxmap/pubs/p225-057.htm#TXMP2a14ec82 Important Dates

You should take the action indicated on or before the dates listed. 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 2007.

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Note.

If any date shown below falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. A statewide legal holiday delays a filing due date only if the IRS office where you are required to file is located in that state. For any due date, you will meet the "file" or "furnish" date requirement if the form is properly addressed and mailed First-Class or sent by an IRS-designated delivery service by the due date. See Private delivery services in Publication 51 (Circular A).

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Fiscal year taxpayers.

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.

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By January 31

• File Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, 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, Miscellaneous Income).
• File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. But 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 2006.

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By February 15

Ask for a new Form W-4 or Forma W-4(SP) from each employee who claimed exemption from federal income tax withholding last year.

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On February 16

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.

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By February 28

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.

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.

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By March 31

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 Reporting Instructions and Information webpage at www.socialsecurity.gov/employer for more information about filing Forms W-2 and W-2c electronically.

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By April 30, July 31, October 31, and  
January 31

Deposit FUTA taxes. Deposit FUTA tax due if it is more than $500.

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Before December 1

Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year.

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On December 31

Form W-5, Earned Income Credit Advance Payment Certificate, expires. Employees who want to receive advance payments of the earned income credit for the next year must give you a new Form W-5.

Introduction

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:

See chapter 17 for information about getting publications and forms.

taxmap/pubs/p225-057.htm#TXMP29c4e4bc Farm Employment

Agricultural Employment

In general, you are an employer of farmworkers if your employees do any of the following types of work.

• Raising or harvesting agricultural or horticultural products on a farm.
• Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment or services pertaining to hurricane labor.
• Handling, processing, or packaging any agricultural or horticultural commodity if you produced more than half of the commodity (for a group of up to 20 unincorporated operators, all of the commodity).
• Work related to cotton ginning, turpentine, or gum resin products.

For more information, see Publication 51 (Circular A).

Workers are generally your employees if they perform services subject to your control. You are not required to withhold or pay employment taxes for independent contractors who are not your employees. For more information, see Publication 15-A, Employer's Supplemental Tax Guide.

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.

taxmap/pubs/p225-057.htm#TXMP6ad56d49 Employer identification number (EIN).

If you have employees, you must have an EIN. If you do not have an EIN, request one on Form SS-4, Application for Employer Identification Number. The instructions for Form SS-4 provide information on how to apply for an EIN by telephone, internet, fax, or mail. You may also apply for an EIN online by visiting the IRS website at www.irs.gov/smallbiz.

taxmap/pubs/p225-057.htm#TXMP46f4ec7d Employee's social security number (SSN).

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. It is also available from the SSA's website at www.socialsecurity.gov.

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.

taxmap/pubs/p225-057.htm#TXMP5fdb74e9 Form I-9.

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 1-800-870-3676. It is also available from the USCIS website at www.uscis.gov. You can contact the USCIS at 1-800-375-5283 or visit the USCIS website at www.uscis.gov for more information.

taxmap/pubs/p225-057.htm#TXMP3c21392d New hire reporting.

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 its website at www.acf.hhs.gov/programs/cse/newhire for more information.

Previous Page:  Publication 225 - Farmer's Tax Guide - Reporting Self-Employment Tax Next Page:  Publication 225 - Farmer's Tax Guide - Family Employees Use     to find additional instances of index items.