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H&r blocks 13. H&r blocks   Employment Taxes Table of Contents What's New for 2013 What's New for 2014 Reminders Important Dates for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Farm Employment Family Employees Crew Leaders Social Security and Medicare TaxesReligious exemption. H&r blocks Wage limit. H&r blocks Federal Income Tax WithholdingNew Form W-4 for 2014. H&r blocks Required Notice to Employees About Earned Income Credit (EIC) Reporting and Paying Social Security, Medicare, and Withheld Federal Income TaxesElectronic deposit requirement. H&r blocks Federal Unemployment (FUTA) TaxReporting and Paying FUTA Tax What's New for 2013 Social security and Medicare tax for 2013. H&r blocks  The employee tax rate for social security is 6. H&r blocks 2%. H&r blocks Previously, the employee tax rate for social security was 4. H&r blocks 2%. H&r blocks The employer tax rate for social security remains unchanged at 6. H&r blocks 2%. H&r blocks The social security wage base limit is $113,700. H&r blocks The Medicare tax rate is 1. H&r blocks 45% each for the employee and employer, unchanged from 2012. H&r blocks There is no wage base limit for Medicare tax. H&r blocks Additional Medicare Tax. H&r blocks  In addition to withholding Medicare tax at 1. H&r blocks 45%, you must withhold a 0. H&r blocks 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. H&r blocks 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. H&r blocks Additional Medicare Tax is only imposed on the employee. H&r blocks There is no employer share of Additional Medicare Tax. H&r blocks All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. H&r blocks 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), Employer's Tax Guide. H&r blocks For more information on Additional Medicare Tax, visit IRS. H&r blocks gov and enter “Additional Medicare Tax” in the search box. H&r blocks Leave-based donation programs to aid victims of Hurricane Sandy. H&r blocks  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. H&r blocks The donated leave will not be included in the income or wages of the employee. H&r blocks The employer may deduct the cash payments as business expenses or charitable contributions. H&r blocks For more information, see Notice 2012-69, 2012-51 I. H&r blocks R. H&r blocks B. H&r blocks 712, available at www. H&r blocks irs. H&r blocks gov/irb/2012-51_IRB/ar09. H&r blocks html. H&r blocks Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended. H&r blocks  The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. H&r blocks Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. H&r blocks Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. H&r blocks For more information, visit IRS. H&r blocks gov and enter “work opportunity credit” in the search box. H&r blocks What's New for 2014 Social security and Medicare tax for 2014. H&r blocks  The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014). H&r blocks The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). H&r blocks There is no limit on the amount of wages subject to Medicare tax. H&r blocks Reminders Additional employment tax information for farmers. H&r blocks  See Publication 51 (Circular A) for more detailed guidance on employment taxes. H&r blocks For the latest information about employment tax developments impacting farmers, go to www. H&r blocks irs. H&r blocks gov/pub51. H&r blocks Correcting a previously filed Form 943. H&r blocks  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. H&r blocks Form 943-X is filed separately from Form 943. H&r blocks For more information on correcting Form 943, see the Instructions for Form 943-X. H&r blocks Federal tax deposits must be made by electronic funds transfer. H&r blocks  You must use electronic funds transfer to make all federal tax deposits. H&r blocks Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). H&r blocks 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 electronic deposits on your behalf. H&r blocks Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. H&r blocks EFTPS is a free service provided by the Department of Treasury. H&r blocks Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. H&r blocks For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). H&r blocks To get more information about EFTPS or to enroll in EFTPS, visit www. H&r blocks eftps. H&r blocks gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). H&r blocks Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. H&r blocks Important Dates for 2014 You should take the action indicated by the dates listed. H&r blocks See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. H&r blocks Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. H&r blocks For these dates, see Publication 509, Tax Calendars (For use in 2014). H&r blocks Note. H&r blocks  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. H&r blocks 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. H&r blocks 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. H&r blocks S. H&r blocks Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. H&r blocks See Private delivery services in Publication 51 (Circular A). H&r blocks Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. H&r blocks Statewide holidays no longer apply. H&r blocks For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A). H&r blocks Fiscal year taxpayers. H&r blocks  The due dates listed below apply whether you use a calendar or a fiscal year. H&r blocks By January 31. H&r blocks   File Form 943 with the IRS. H&r blocks If you deposited all Form 943 taxes when due, you have 10 additional days to file. H&r blocks Furnish each employee with a completed Form W-2, Wage and Tax Statement. H&r blocks Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC). H&r blocks File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. H&r blocks If you deposited all the FUTA tax when due, you have 10 additional days to file. H&r blocks File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. H&r blocks If you deposited all Form 945 taxes when due, you have 10 additional days to file. H&r blocks By February 15. H&r blocks  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. H&r blocks On February 16. H&r blocks  Any Form W-4 claiming exemption from withholding for the previous year has now expired. H&r blocks Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. H&r blocks If the employee does not give you a new Form W-4, withhold taxes based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. H&r blocks If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place. H&r blocks By February 28. H&r blocks   File paper Forms 1099 and 1096. H&r blocks File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U. H&r blocks S. H&r blocks Information Returns, with the IRS. H&r blocks For electronically filed returns, see By March 31 below. H&r blocks File paper Forms W-2 and W-3. H&r blocks File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). H&r blocks For electronically filed returns, see By March 31 below. H&r blocks By March 31. H&r blocks   File electronic Forms W-2 and 1099. H&r blocks File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. H&r blocks For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at www. H&r blocks socialsecurity. H&r blocks gov/employer. H&r blocks For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically. H&r blocks By April 30, July 31, October 31, and January 31. H&r blocks   Deposit FUTA taxes. H&r blocks Deposit FUTA tax due if it is more than $500. H&r blocks Before December 1. H&r blocks  Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year. H&r blocks Introduction You are generally required to withhold federal income tax from the wages of your employees. H&r blocks 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). H&r blocks You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. H&r blocks This chapter includes information about these taxes. H&r blocks You must also pay self-employment tax on your net earnings from farming. H&r blocks See chapter 12 for information on self-employment tax. H&r blocks Topics - This chapter discusses: Farm employment, Family employees, Crew leaders, Social security and Medicare taxes, Additional Medicare Tax withholding, Federal income tax withholding, Reporting and paying social security, Medicare, and withheld federal income taxes, and FUTA tax. H&r blocks Useful Items - You may want to see: Publication 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. H&r blocks Farm Employment In general, you are an employer of farmworkers if your employees do any of the following types of work. H&r blocks Raising or harvesting agricultural or horticultural products on a farm, including raising and feeding of livestock. H&r blocks Operating, managing, conserving, improving, or maintaining your farm and its tools and equipment. H&r blocks Services performed in salvaging timber, or clearing land of brush and other debris, left by a hurricane (also known as hurricane labor). H&r blocks 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). H&r blocks Work related to cotton ginning, turpentine, gum resin products, or the operation and maintenance of irrigation facilities. H&r blocks For more information, see Publication 51 (Circular A). H&r blocks Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. H&r blocks This is so even when you give the employee freedom of action. H&r blocks What matters is that you have the right to control the details of how the services are performed. H&r blocks You are responsible for withholding and paying employment taxes for your employees. H&r blocks You are also required to file employment tax returns. H&r blocks These requirements do not apply to amounts that you pay to independent contractors. H&r blocks See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee. H&r blocks If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee. H&r blocks Special rules apply to crew leaders. H&r blocks See Crew Leaders , later. H&r blocks Employer identification number (EIN). H&r blocks   If you have employees, you must have an EIN. H&r blocks If you do not have an EIN, you may apply for one online. H&r blocks Go to IRS. H&r blocks gov and click on the Apply for an EIN Online link under Tools. H&r blocks You may also apply for an EIN by calling 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). H&r blocks The hours of operation for both numbers are Monday–Friday form 7:00 a. H&r blocks m. H&r blocks –7:00 p. H&r blocks m. H&r blocks local time (Alaska and Hawaii follow Pacific time). H&r blocks You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS. H&r blocks Employee's social security number (SSN). H&r blocks   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). H&r blocks Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). H&r blocks It is also available from the SSA's website at www. H&r blocks socialsecurity. H&r blocks gov. H&r blocks   The employee must furnish evidence of age, identity, and U. H&r blocks S. H&r blocks citizenship or lawful immigration status permitting employment with the Form SS-5. H&r blocks An employee who is age 18 or older must appear in person with this evidence at an SSA office. H&r blocks Form I-9. H&r blocks    You must verify that each new employee is legally eligible to work in the United States. H&r blocks This includes completing the Form I-9, Employment Eligibility Verification. H&r blocks Form I-9 is available from the U. H&r blocks S. H&r blocks Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. H&r blocks Form I-9 is also available from the USCIS website at www. H&r blocks uscis. H&r blocks gov. H&r blocks You can also contact the USCIS at 1-800-375-5283 for more information. H&r blocks New hire reporting. H&r blocks   You are required to report any new employee to a designated state new hire registry. H&r blocks Many states accept a copy of Form W-4 with employer information added. H&r blocks Visit the Office of Child Support Enforcement website at www. H&r blocks acf. H&r blocks hhs. H&r blocks gov/programs/cse/newhire for more information. H&r blocks Family Employees Generally, the wages you pay to family members who are your employees are subject to employment taxes. H&r blocks However, certain exemptions may apply to wages paid to your child, spouse, or parent. H&r blocks Exemptions for your child. H&r blocks   Payments for the services of your child under age 18 who works for you in your trade or business (including a farm) are not subject to social security and Medicare taxes. H&r blocks However, see Nonexempt services of a child or spouse , later. H&r blocks Payments for the services of your child under age 21 employed by you in other than a trade or business, such as payments for household services in your home, are also not subject to social security or Medicare taxes. H&r blocks Payments for the services of your child under age 21 employed by you, whether or not in your trade or business, are not subject to FUTA tax. H&r blocks Although not subject to social security, Medicare, or FUTA tax, the child's wages still may be subject to federal income tax withholding. H&r blocks Exemptions for your spouse. H&r blocks   Payments for the services of your spouse who works for you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes, but not FUTA tax. H&r blocks   Payments for the services of your spouse employed by you in other than a trade or business, such as payments for household services in your home, are not subject to social security, Medicare, or FUTA taxes. H&r blocks Nonexempt services of a child or spouse. H&r blocks   Payments for the services of your child or spouse are subject to federal income tax withholding as well as social security, Medicare, and FUTA taxes if he or she works for any of the following entities. H&r blocks A corporation, even if it is controlled by you. H&r blocks A partnership, even if you are a partner. H&r blocks This does not apply to wages paid to your child if each partner is a parent of the child. H&r blocks An estate or trust, even if it is the estate of a deceased parent. H&r blocks In these situations, the child or spouse is considered to work for the corporation, partnership, or estate, not you. H&r blocks Exemptions for your parent. H&r blocks   Payments for the services of your parent employed by you in your trade or business are subject to federal income tax withholding and social security and Medicare taxes. H&r blocks Social security and Medicare taxes do not apply to wages paid to your parent for services not in your trade or business, but they do apply to payments for household services in your home if both the following conditions are satisfied. H&r blocks You have a child living in your home who is under age 18 or has a physical or mental condition that requires care by an adult for at least 4 continuous weeks in a calendar quarter. H&r blocks You are a widow or widower; or divorced and not remarried; or have a spouse in the home who, because of a physical or mental condition, cannot care for your child for at least 4 continuous weeks in the quarter. H&r blocks   Wages you pay to your parent are not subject to FUTA tax, regardless of the type of services provided. H&r blocks Qualified joint venture. H&r blocks   If spouses elect to be treated as a qualified joint venture instead of a partnership, either spouse may report and pay the employment taxes due on the wages paid to employees using the EIN of that spouse's sole proprietorship. H&r blocks For more information about qualified joint ventures, see chapter 12. H&r blocks Crew Leaders If farmworkers are provided by a crew leader, the crew leader may be the employer of the workers. H&r blocks Social security and Medicare taxes. H&r blocks   For social security and Medicare tax purposes, the crew leader is the employer of the workers if both of the following requirements are met. H&r blocks The crew leader pays (either on his or her own behalf or on behalf of the farmer) the workers for their farm labor. H&r blocks The crew leader has not entered into a written agreement with the farmer under which the crew leader is designated as an employee of the farmer. H&r blocks Federal income tax withholding. H&r blocks   If the crew leader is the employer for social security and Medicare tax purposes, the crew leader is the employer for federal income tax withholding purposes. H&r blocks Federal unemployment (FUTA) tax. H&r blocks   For FUTA tax purposes, the crew leader is the employer of the workers if, in addition to the earlier requirements, either of the following requirements are met. H&r blocks The crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act. H&r blocks Substantially all crew members operate or maintain mechanized equipment provided by the crew leader as part of the service to the farmer. H&r blocks   The farmer is the employer of workers furnished by a crew leader in all other situations. H&r blocks In addition, the farmer is the employer of workers furnished by a registered crew leader if the workers are the employees of the farmer under the common-law test. H&r blocks For example, some farmers employ individuals to recruit farmworkers exclusively for them. H&r blocks Although these individuals may be required to register under the Migrant and Seasonal Agricultural Worker Protection Act, the workers are employed directly by the farmer. H&r blocks The farmer is the employer in these cases. H&r blocks For information about common-law employees, see section 1 of Publication 15-A. H&r blocks For information about crew leaders, see the Department of Labor website at www. H&r blocks dol. H&r blocks gov/whd/regs/compliance/whdfs49. H&r blocks htm. H&r blocks Social Security and Medicare Taxes 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. H&r blocks You pay the employee $150 or more in cash wages (count all wages paid on a time, piecework, or other basis) during the year for farmwork (the $150 test). H&r blocks The $150 test applies separately to each farmworker that you employ. H&r blocks If you employ a family of workers, each member is treated separately. H&r blocks Do not count wages paid by other employers. H&r blocks You pay cash and noncash wages of $2,500 or more during the year to all your employees for farmwork (the $2,500 test). H&r blocks If the $2,500 test for the group is not met, the $150 test for an employee still applies. H&r blocks Exceptions. H&r blocks   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. H&r blocks However, these wages count toward the $2,500 test for determining whether other farmworkers' wages are subject to social security and Medicare taxes. H&r blocks   A seasonal farmworker is a worker who: Works as a hand-harvest laborer, Is paid piece rates in an operation usually paid on this basis in the region of employment, Commutes daily from his or her permanent home to the farm, and Worked in agriculture less than 13 weeks in the preceding calendar year. H&r blocks   See Family Employees , earlier, for certain exemptions from social security and Medicare taxes that apply to your child, spouse, and parent. H&r blocks Religious exemption. H&r blocks   An exemption from social security and Medicare taxes is available to members of a recognized religious group or division opposed to public insurance. H&r blocks This exemption is available only if both the employee and the employer are members of the group or division. H&r blocks   For more information, see Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers. H&r blocks Cash wages. H&r blocks   Only cash wages paid to farmworkers are subject to social security and Medicare taxes. H&r blocks Cash wages include checks, money orders, and any kind of money or cash. H&r blocks   Only cash wages subject to social security and Medicare taxes are credited to your employees for social security benefit purposes. H&r blocks Payments not subject to these taxes, such as commodity wages, do not contribute to your employees' social security coverage. H&r blocks For information about social security benefits, contact the SSA at 1-800-772-1213 or online at www. H&r blocks socialsecurity. H&r blocks gov. H&r blocks Noncash wages. H&r blocks    Noncash wages include food, lodging, clothing, transportation passes, and other goods and services. H&r blocks Noncash wages paid to farmworkers, including commodity wages, are not subject to social security and Medicare taxes. H&r blocks However, they are subject to these taxes if the substance of the transaction is a cash payment. H&r blocks For information on lodging provided as a condition of employment, see Publication 15-B. H&r blocks   Report the value of noncash wages in box 1 of Form W-2 together with cash wages. H&r blocks Do not show noncash wages in box 3 or in box 5, (unless the substance of the transaction is a cash payment). H&r blocks Tax rates and social security wage limit. H&r blocks   For 2013, the employer and the employee will pay the following taxes. H&r blocks The employer and employee each pay 6. H&r blocks 2% of cash wages for social security tax (old-age, survivors, and disability insurance). H&r blocks The employer and employee each pay 1. H&r blocks 45% of cash wages for Medicare tax (hospital insurance). H&r blocks The employee pays 0. H&r blocks 9% of cash wages in excess of $200,000 for Additional Medicare Tax. H&r blocks Wage limit. H&r blocks   The limit on wages subject to the social security tax for 2013 is $113,700. H&r blocks There is no limit on wages subject to the Medicare tax. H&r blocks All covered wages are subject to the Medicare tax. H&r blocks Additionally, all wages in excess of $200,000 are subject to Additional Medicare Tax withholding. H&r blocks Paying employee's share. H&r blocks   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. H&r blocks It is additional income to the employee. H&r blocks 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. H&r blocks Example. H&r blocks Jane operates a small family fruit farm. H&r blocks She employs day laborers in the picking season to enable her to timely get her crop to market. H&r blocks She does not deduct the employees' share of social security and Medicare taxes from their pay; instead, she pays it on their behalf. H&r blocks 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). H&r blocks For 2013, Jane paid Mary $1,000 during the year. H&r blocks Susan enters $1,076. H&r blocks 50 in box 1 of Mary's Form W-2 ($1,000 wages plus $76. H&r blocks 50 social security and Medicare taxes paid for Mary). H&r blocks She enters $1,000 in boxes 3 and 5 of Mary's Form W-2. H&r blocks Additional Medicare Tax. H&r blocks   In addition to withholding Medicare tax at 1. H&r blocks 45%, you must withhold a 0. H&r blocks 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. H&r blocks 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. H&r blocks Additional Medicare Tax is only imposed on the employee. H&r blocks There is no employer share of Additional Medicare Tax. H&r blocks All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold. H&r blocks   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). H&r blocks For more information on Additional Medicare Tax, visit IRS. H&r blocks gov and enter “Additional Medicare Tax” in the search box. H&r blocks Federal Income Tax Withholding If the cash wages you pay to farmworkers are subject to social security and Medicare taxes, they are also subject to federal income tax withholding. H&r blocks Although noncash wages are subject to federal income tax, withhold income tax only if you and the employee agree to do so. H&r blocks The amount to withhold is figured on gross wages without taking out social security and Medicare taxes, union dues, insurance, etc. H&r blocks Form W-4. H&r blocks   Generally, the amount of federal income tax you withhold is based on the employee's marital status and withholding allowances claimed on the employee's Form W-4. H&r blocks In general, an employee can claim withholding allowances on Form W-4 equal to the number of exemptions the employee will be entitled to claim on his or her tax return. H&r blocks An employee may also be able to claim a special withholding allowance and allowances for estimated deductions and credits. H&r blocks   Do not withhold federal income tax from the wages of an employee who, by filing Form W-4, certifies that he or she had no federal income tax liability last year and anticipates no liability for the current year. H&r blocks   You should give each new employee a Form W-4 as soon as you hire the employee. H&r blocks For Spanish-speaking employees, you may use Formulario W-4(SP) which is the Spanish translation of Form W-4. H&r blocks Have the employee complete and return the form to you before the first payday. H&r blocks If the employee does not return the completed form, you must withhold federal income tax as if the employee is single and claims no withholding allowances. H&r blocks New Form W-4 for 2014. H&r blocks   You should make the 2014 Form W-4 available to your employees and encourage them to check their income tax withholding for 2014. H&r blocks Those employees who owed a large amount of tax or received a large refund for 2013 may want to submit a new Form W-4. H&r blocks You cannot accept substitute Forms W-4 developed by employees. H&r blocks How to figure withholding. H&r blocks   You can use one of several methods to determine the amount to withhold. H&r blocks The methods are described in Publication 51 (Circular A), which contains tables showing the correct amount of federal income tax you should withhold. H&r blocks Publication 51 (Circular A) also contains additional information about federal income tax withholding. H&r blocks Nonemployee compensation. H&r blocks   Generally, you do not have to withhold federal income tax on payments for services to individuals who are not your employees. H&r blocks However, you may be required to report these payments on Form 1099-MISC, Miscellaneous Income, and to withhold under the backup withholding rules. H&r blocks For more information, see the Instructions for Form 1099-MISC. H&r blocks Required Notice to Employees About Earned Income Credit (EIC) You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. H&r blocks However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4. H&r blocks You meet the notification requirement by giving each employee any of the following. H&r blocks Form W-2, which contains EIC notification on the back of Copy B. H&r blocks A substitute Form W-2 with the exact EIC wording shown on the back of copy B of Form W-2. H&r blocks Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC). H&r blocks Your own written statement with the exact wording of Notice 797. H&r blocks For more information, see Publication 51 (Circular A). H&r blocks Reporting and Paying Social Security, Medicare, and Withheld Federal Income Taxes You must withhold federal income, social security, and Medicare taxes required to be withheld from the salaries and wages of your employees. H&r blocks You are liable for the payment of these taxes to the federal government whether or not you collect them from your employees. H&r blocks If, for example, you withhold less than the correct tax from an employee's wages, you are still liable for the full amount. H&r blocks You must also pay the employer's share of social security and Medicare taxes. H&r blocks There is no employer share of Additional Medicare Tax. H&r blocks Form 943. H&r blocks   Report withheld federal income tax, social security tax, and Medicare tax on Form 943. H&r blocks Your 2013 Form 943 is due by January 31, 2014 (or February 10, 2014, if you made deposits on time in full payment of the taxes due for the year). H&r blocks Deposits. H&r blocks   Generally, you must deposit both the employer and employee shares of social security and Medicare taxes and federal income tax withheld during the year. H&r blocks However, you may make payments with Form 943 instead of depositing them if you accumulate less than a $2,500 tax liability (“Total taxes after adjustments” line on Form 943) during the year and you pay in full with a timely filed return. H&r blocks   For more information on deposit rules, see Publication 51 (Circular A). H&r blocks Electronic deposit requirement. H&r blocks   You must use electronic funds transfer to make all federal tax deposits. H&r blocks Generally, electronic funds transfers are made using EFTPS. H&r blocks 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 electronic deposits on your behalf. H&r blocks Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. H&r blocks EFTPS is a free service provided by the Department of Treasury. H&r blocks Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. H&r blocks   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). H&r blocks To get more information about EFTPS or to enroll in EFTPS, visit www. H&r blocks eftps. H&r blocks gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). H&r blocks Additional information about EFTPS is also available in Publication 966. H&r blocks Form W-2. H&r blocks   By January 31, you must furnish each employee a Form W-2 showing total wages for the previous year and total federal income tax, social security tax, and Medicare tax withheld. H&r blocks However, if an employee stops working for you and requests the form earlier, you must give it to the employee within 30 days of the later of the following dates. H&r blocks The date the employee requests the form. H&r blocks The date you make your final payment of wages to the employee. H&r blocks Compensation paid to H-2A visa holders. H&r blocks   Report compensation of $600 or more paid to foreign agricultural workers who entered the country on H-2A visas in box 1 of Form W-2. H&r blocks Compensation paid to H-2A workers for agricultural labor performed in connection with this visa is not subject to social security and Medicare taxes, and therefore should not be reported as wages subject to social security tax (line 2), Medicare tax (line 4), or Additional Medicare Tax (line 6) on Form 943, and should not be reported as social security wages (box 3) or Medicare wages (box 5) on Form W-2. H&r blocks   An employer is not required to withhold federal income tax from compensation it pays to an H-2A worker for agricultural labor performed in connection with this visa unless the worker asks for withholding and the employer agrees. H&r blocks In this case, the worker must give the employer a completed Form W-4. H&r blocks Federal income tax withheld should be reported on Form 943, line 8, and in box 2 of Form W-2. H&r blocks   These reporting rules apply when the H-2A worker provides his or her taxpayer identification number (TIN) to the employer. H&r blocks For the rules relating to backup withholding and reporting when the H-2A worker does not provide a TIN, see the Instructions for Form 1099-MISC and the Instructions for Form 945. H&r blocks Trust fund recovery penalty. H&r blocks   If you are responsible for withholding, accounting for, depositing, or paying federal withholding taxes and willfully fail to do so, you can be held liable for a penalty equal to the withheld tax not paid. H&r blocks A responsible person can be an officer of a corporation, a partner, a sole proprietor, or an employee of any form of business. H&r blocks A trustee or agent with authority over the funds of the business can also be held responsible for the penalty. H&r blocks   Willfully means voluntarily, consciously, and intentionally. H&r blocks Paying other expenses of the business instead of the taxes due is acting willfully. H&r blocks Consequences of treating an employee as an independent contractor. H&r blocks   If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. H&r blocks See Publication 15-A for more information. H&r blocks Federal Unemployment (FUTA) Tax You must pay FUTA tax if you meet either of the following tests. H&r blocks You paid cash wages of $20,000 or more to farmworkers in any calendar quarter during the current or preceding calendar year. H&r blocks You employed 10 or more farmworkers for some part of at least 1 day during any 20 or more different calendar weeks during the current or preceding calendar year. H&r blocks These rules do not apply to exempt services of your spouse, your parents, or your children under age 21. H&r blocks See Family Employees , earlier. H&r blocks Alien farmworkers. H&r blocks   Wages paid to aliens admitted on a temporary basis to the United States to perform farmwork (also known as “H-2A visa workers”) are exempt from FUTA tax. H&r blocks However, include your employment of these workers and the wages you paid them to determine whether you meet either of the above tests. H&r blocks Commodity wages. H&r blocks   Payments in kind for farm labor are not cash wages. H&r blocks Do not count them to figure whether you are subject to FUTA tax or to figure how much tax you owe. H&r blocks Tax rate and credit. H&r blocks   The gross FUTA tax rate is 6. H&r blocks 0% of the first $7,000 cash wages you pay to each employee during the year. H&r blocks However, you are given a credit of up to 5. H&r blocks 4% of the first $7,000 cash wages you pay to each employee for the state unemployment tax you pay. H&r blocks If your state tax rate (experience rate) is less than 5. H&r blocks 4%, you may still be allowed the full 5. H&r blocks 4% credit. H&r blocks   If you do not pay the state tax, you cannot take the credit. H&r blocks If you are exempt from state unemployment tax for any reason, the full 6. H&r blocks 0% rate applies. H&r blocks See the Instructions for Form 940 for additional information. H&r blocks More information. H&r blocks   For more information on FUTA tax, see Publication 51 (Circular A). H&r blocks Reporting and Paying FUTA Tax The FUTA tax is imposed on you as the employer. H&r blocks It must not be collected or deducted from the wages of your employees. H&r blocks Form 940. H&r blocks   Report FUTA tax on Form 940. H&r blocks The 2013 Form 940 is due January 31, 2014 (or February 10, 2014, if you timely deposited the full amount of your 2013 FUTA tax). H&r blocks Deposits. H&r blocks   If at the end of any calendar quarter you owe, but have not yet deposited, more than $500 in FUTA tax for the year, you must make a deposit by the end of the following month. H&r blocks If the undeposited tax is $500 or less at the end of a quarter, you do not have to deposit it. H&r blocks You can add it to the tax for the next quarter. H&r blocks If the total undeposited tax is more than $500 at the end of the next quarter, a deposit will be required. H&r blocks If the total undeposited tax at the end of the 4th quarter is $500 or less, you can either make a deposit or pay it with your return by the January 31, 2014, due date. H&r blocks Electronic deposit requirement. H&r blocks   You must use electronic funds transfer to make all federal tax deposits. H&r blocks Generally, electronic funds transfers are made using EFTPS. H&r blocks 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 electronic deposits on your behalf. H&r blocks Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. H&r blocks EFTPS is a free service provided by the Department of Treasury. H&r blocks Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. H&r blocks   For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). H&r blocks To get more information about EFTPS or to enroll in EFTPS, visit www. H&r blocks eftps. H&r blocks gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). H&r blocks Additional information about EFTPS is also available in Publication 966. H&r blocks Prev  Up  Next   Home   More Online Publications
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Is My Pension or Annuity Payment Taxable?

This application will help you determine if your pension or annuity payment from an employer sponsored retirement plan is taxable.  This application does not address Individual Retirement Arrangements (IRAs).

Information You Will Need:

  • All income documents
  • Federal income tax withheld (Form W2-P or Form1099)

Estimated Completion Time: 11 minutes. However: 5 minutes of inactivity will end the interview and you will be forced to start over.

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Page Last Reviewed or Updated: 14-Feb-2014

The H&r Blocks

H&r blocks Index A Accelerated cost recovery system (ACRS):, ACRS Defined Alternate method, Alternate ACRS Method (Modified Straight Line Method) Classes of recovery property, Classes of Recovery Property Deduction, short tax year, ACRS Deduction in Short Tax Year Defined, ACRS Defined Dispositions, Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. H&r blocks Recovery periods, Recovery Periods Unadjusted basis, Unadjusted Basis B Basis: Adjusted, Adjusted basis. H&r blocks Unadjusted, ACRS, Unadjusted Basis C Changing methods, How To Change Methods D Declining balance method, Declining Balance Method Deduction: ACRS, How To Figure the Deduction How to figure, How To Figure the Deduction Dispositions, Dispositions, Dispositions I Income forecast method, Income Forecast Method L Listed property:, Listed Property Defined 5% owner, 5% owner. H&r blocks Computers, related equipment, Computers and Related Peripheral Equipment Defined, Listed Property Defined Entertainment use, Entertainment Use Leased, Leased Property Other transportation property, Other Property Used for Transportation Predominant use test, Predominant Use Test Qualified business use, Qualified Business Use Recordkeeping, What Records Must Be Kept, Adequate Records Related person, Related person. H&r blocks Reporting on Form 4562, Reporting Information on Form 4562 Use by employee, Employees M Methods of figuring depreciation:, Income Forecast Method ACRS, How To Figure the Deduction Declining Balance, Declining Balance Method Income forecast, Income Forecast Method Straight line, Straight Line Method P Passenger automobile: Defined, Passenger Automobile Defined Predominant use test, applying, Applying the Predominant Use Test Property: ACRS, What Can and Cannot Be Depreciated Under ACRS Intangible, Intangible property. H&r blocks R Recapture: Depreciation, Depreciation Recapture Excess depreciation, listed property, Recapture of excess depreciation. H&r blocks Recordkeeping: For listed property, What Records Must Be Kept S Salvage value, Salvage Value Straight line method, Straight Line Method U Useful life, Useful Life V Videocassettes, Videocassettes. H&r blocks Prev  Up     Home   More Online Publications