IRS Reminds Employers about Withholding Rules for Foreign Agricultural Workers
NOTE: This headliner is current through the publication date. Since changes may have occurred, no guarantees are made concerning the technical accuracy after the publication date.
Headliner Volume 323
February 14, 2012
Foreign agricultural workers temporarily admitted to the United States on H-2A visas are exempt from U.S. Social Security and Medicare taxes on payments for services performed under an H-2A visa. In addition, compensation paid to H-2A workers is not considered to be "wages" for purposes of federal income tax withholding, and is not subject to mandatory withholding unless backup withholding applies (See below).
However, the employer may voluntarily withhold U.S. federal income tax from the H-2A worker’s wages if both the employer and the employee agree.
An employer is required to report wages paid to an H-2A worker on a Form W-2, Wage and Tax Statement (PDF), if:
- The worker presents a U.S. social security number or an Individual Taxpayer Identification Number (ITIN) issued by the Internal Revenue Service
- The worker was paid $600 or more during the calendar year
However, the employer does not report any Medicare or Social Security wages or Medicare or Social Security withheld taxes in the applicable boxes on the worker’s Form W-2.
The employer must also file Form 943, Employer's Annual Federal Tax Return for Agricultural Employees (PDF), if the employer withheld any U.S. federal income taxes from the wages.
Wages may be subject to backup withholding at the rate of 28 percent if the H-2A worker did not furnish the employer with a U.S. social security number or an ITIN issued by the IRS, and the aggregate annual wages paid to the H-2A worker equal or exceed $600. If backup withholding applies, then the wages subject to backup withholding – and the U.S. federal income tax withheld from those wages – would be reported on Form 1099-MISC, Miscellaneous Income, and Form 945, Annual Return of Withheld Federal Tax (PDF). If the employer does not properly withhold the 28 percent tax from such payments, the employer may be subject to the backup withholding tax.
More information is at the Foreign Agricultural Workers page.
