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Publication #FE415

2017 Handbook of Employment Regulations Affecting Florida Farm Employers and Workers: Social Security and Medicare [Federal]1

Fritz Roka, Michael Olexa, Carol Fountain, and Jessica Fernandez2

Purpose

To provide social benefits to qualified workers who retire, become disabled, and/or require medical assistance.

Who Must Comply

Farm employers must make Social Security and Medicare deductions

  • If they pay an employee $150 or more in cash wages during a calendar year.

  • If they pay total wages of $2,500 or more per year to all employees (these criteria are identical to those for income tax withholding).

  • For most types of agricultural labor (including the employer's parents, spouse, and children eighteen years of age and older).

Exceptions

  • A child under eighteen years of age in the employ of his/her parent.

  • H-2A temporary foreign agricultural workers.

In the case of farm labor contractors (FLC), while farmers can rely on them to withhold and deposit Social Security and Medicare taxes as part of the FLC's services (the IRS uses a twenty-factor text to determine who is responsible for these taxes), it is mandatory for farm operators to keep a record of the FLC's name, permanent address, and employer ID number.

Tax Rules

The total annual combined employer-employee taxes for Social Security and Medicare are 15.3 percent of gross wages. Employers must do the following:

  • Social Security Taxes. Withhold 6.2 percent of the employee's cash wages (including the initial $150) and add 6.2 percent as the employer's contribution.

  • Medicare Taxes. Withhold 1.45 percent of the employee's cash wages (including the initial $150) and add 1.45 percent as the employer's contribution.

Deposit / Recordkeeping Rules

Employees must be given a Form W-2, Wage and Tax Statement, showing the amount of earnings, income tax withheld, and amount of Social Security and Medicare deductions by January 31st of each year. Those employees who had zero withheld must be provided with Notice 797, The Earned Income Tax Credit Refund, or Copy C of the W-2 Form. Employees who claimed total exemption in the previous year must fill out a new W-4 Form by February 15th of the following year.

Employers must deposit FICA taxes in a Federal Reserve Bank or authorized financial institution, depending on the size of the combined deductions/contributions. Deposits must be accompanied by Form 8109, Federal Tax Deposit Coupon. The deposit rule schedule is the same as for income tax withholding.

Employers must attach copies of each employee's W-2 Form to Form W-3, Transmittal of Income and Tax Statements, and send both to the Social Security Administration by February 28th.

Employers must file Form 943, Employer's Annual Tax Return for Agricultural Employers, with the IRS by January 31st of each year (or February 10th if taxes paid in full).

The total of W-2 wages and taxes should equal total of the W-3 wages and taxes which should equal the total of Form 943 wages and taxes. That figure should then equal the total of taxes deposited. Reconciling and correcting any differences between the various forms will reduce the chance of notices, penalties, and audits.

Employers are required to keep payroll records for four years after the taxes are due and paid, which must include

  • Names, addresses, and occupations of employees.

  • Periods of employment.

  • Social Security numbers.

  • Employer's identification number (EIN).

  • Total amount and date of each wage payment.

  • Deductions for FICA and income tax withholding.

Self-Employed Farmers

Under the Self-Employed Contributions Act, self-employed farmers (unincorporated) who report a net income of $400 or more from farming operations must contribute to Social Security and Medicare. The contribution rate in 2017 was 12.4 percent of annual net earnings up to $127,200 for Social Security and 2.9 percent of annual net earnings (unlimited) for Medicare (15.3 percent total).

Farmers who earn wages subject to Social Security and Medicare deductions must contribute to the self-employment income until the combined earnings reach the annual Social Security and Medicare limits. Self-employed income is reported on Schedule F (Form 1040).

Additional Information

The following fact sheets are available from most local Social Security offices:

  • No. 4 – If You're Self-Employed

  • No. 5 – Reporting Farm Income

  • No. 6 – Crew Leaders and Farmers

  • No. 8 – Agricultural Workers

Responsible Agency

  • United States Department of Health and Human Services

  • Social Security Administration

For local Social Security offices, see telephone directory for

  • United States Government

  • Health and Human Services

  • Social Security Administration

Dial toll-free 1-800-772-1213 or visit online at https://secure.ssa.gov/ICON/main.jsp.

For local Internal Revenue Service offices, see telephone directory for

  • United States Government

  • Internal Revenue Service

Dial toll-free 1-800-829-1040 or visit online at https://www.irs.gov/help-resources/contact-your-local-irs-office

For ordering tax forms, dial toll-free 1-800-829-3676

For tax information and assistance, dial toll-free 1-800-829-1040

Footnotes

1.

This is EDIS document FE415, a publication of the Department of Food and Resource Economics, UF/IFAS Extension. Published 2003, revised 2009 and 2017. This handbook is produced and distributed by the UF/IFAS Center for Agricultural and Natural Resource Law. Originally published by Leo Polopolus. Please visit the EDIS website at http://edis.ifas.ufl.edu.

2.

Fritz Roka, associate professor, Food and Resource Economics Department, UF/IFAS Extension, Southwest Florida Research and Education Center, Immokalee, FL. Michael Olexa, professor, Food and Resource Economics Department, and director, Center for Agricultural and Natural Resource Law UF/IFAS Extension, Gainesville, FL. Carol Fountain, editor, Food and Resource Economics Department, UF/IFAS Extension, Gainesville, FL. Jessica Fernandez, graduate student, Levin College of Law, University of Florida, Gainesville, FL.

This document is designed to provide accurate, current, and authoritative information on the subject. However, since the laws, administrative rulings, and court decisions on which it is based are subject to constant revision, portions of this publication could become outdated at any time. This publication is distributed with the understanding that the authors are not engaged in rendering legal or other professional advice, and the information contained herein should not be regarded as a substitute for professional advice. For these reasons, the utilization of these materials by any person constitutes an agreement to hold harmless the authors, the Institute of Food and Agricultural Sciences, and the University of Florida for any liability claims, damages, or expenses that may be incurred by any person as a result of reference to or reliance on the information contained in this publication.


The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other UF/IFAS Extension publications, contact your county's UF/IFAS Extension office.

U.S. Department of Agriculture, UF/IFAS Extension Service, University of Florida, IFAS, Florida A & M University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, dean for UF/IFAS Extension.