Form 943 (2018) Checklist for Agricultural Employers Checklist

Form 943 (2018) Checklist for Employers

Form 943 reports annual Social Security, Medicare, Additional Medicare Tax, and federal income tax withheld from agricultural employees. The 2018 version applies Tax Cuts and Jobs Act (TCJA) wage withholding rules and includes the Qualified Small Business Payroll Tax Credit for Increasing Research Activities on line 12, available only when Form 8974 is properly attached.

Filing Steps

1. Verify Employee Count and Wage Bases

Report the number of agricultural employees employed during the pay period that includes March 12, 2018, on line 1. Separate total wages subject to social security tax (line 2) from total wages subject to Medicare tax (line 4); these may differ based on agricultural wage exemptions under IRC Section 3121(a)(8)(B).

Important Filing Thresholds:

• You must file Form 943 if you paid cash wages of $150 or more to any single farmworker during the year
• You must also file if the total wages (cash and noncash) paid to all farmworkers reached $2,500 or more during the year
• Special rules apply to certain hand-harvest laborers who receive less than $150 in annual cash wages

2. Calculate Social Security Tax

Calculate social security tax on line 3 using the 2018 rate of 12.4% (0.124) applied to line 2 wages. This rate represents the combined employer share (6.2%) and employee share (6.2%).

Critical Wage Base Limit: Do not report an employee’s social security wages exceeding $128,400 for 2018. The wage base limit applies to each employee. Once an employee’s wages reach $128,400, no additional social security tax applies to that employee’s wages for the remainder of 2018. This limit applies to both the employer and employee portions of Social Security tax.

3. Calculate Medicare Tax

Calculate Medicare tax on line 5 using the 2018 rate of 2.9% (0.029) applied to line 4 wages. This rate represents the combined employer share (1.45%) and employee share (1.45%).

No Wage Base Limit: Unlike the social security tax, there is no wage base limit for the Medicare tax. All cash wages paid to agricultural employees for farmwork are subject to Medicare tax regardless of the amount.

4. Identify and Report Additional Medicare Tax Withholding

Report Additional Medicare Tax withholding on line 7. Multiply line 6 (total wages subject to Additional Medicare Tax withholding) by 0.9% (0.009).

Employee-Only Tax: Additional Medicare Tax is imposed only on the employee. There is no employer share or employer contribution for the Additional Medicare Tax. Employers are required to withhold this tax, but do not pay a matching amount.

Withholding Requirements:

• Begin withholding Additional Medicare Tax in the pay period when you pay wages exceeding $200,000 to an employee
• Continue withholding each pay period until the end of the calendar year
• The $200,000 threshold applies regardless of the employee’s filing status
• All wages subject to Medicare tax are also subject to Additional Medicare Tax withholding if they exceed the $200,000 threshold

5. Report Federal Income Tax Withheld

Report federal income tax withheld on line 8. Include all income tax withheld from agricultural employees during 2018 under IRC Section 3401 and applicable Treasury Regulations. Generally, you must withhold federal income tax from employees from whom you also withhold social security and Medicare taxes.

6. Calculate Total Taxes Before Adjustments

Sum lines 3, 5, 7, and 8 on line 9 to establish total taxes before adjustments. Add any current-year adjustments on line 10. Line 10 may be used to adjust for rounding of fractions of cents or to adjust for the uncollected employee share of social security and Medicare taxes on third-party sick pay. Enter the adjusted total on line 11.

Adjustment Guidelines:

• Use a minus sign to show decreases to amounts reported on lines 3, 5, or 7
• If a fraction-of-cents adjustment is the only entry on line 10, write “Fractions Only” on the dotted line
• Minor differences between line 13 and line 14 may result from rounding to the nearest cent each payroll period

7. Apply Research Credit if Eligible

Complete Form 8974 and attach to Form 943 only if the employer qualifies for the Qualified Small Business Payroll Tax Credit for Increasing Research Activities. Enter the allowable credit amount on line 12.

Eligibility and Requirements:

• For 2018, this credit applies only to qualified small businesses engaged in qualified research activities
• Agricultural operations claiming this credit must maintain contemporaneous documentation of research-related wages
• The credit is applied against the employer’s share of social security tax
• The payroll tax credit must be elected on the original income tax return (filed timely, including extensions)
• Form 8974 must be attached to Form 943 if claiming this credit
• The credit may be carried forward to succeeding quarters if not fully used in the current quarter

8. Reconcile Total Taxes and Deposits

Subtract line 12 from line 11 and enter the result on line 13 (total taxes after adjustments and credits). Reconcile against total deposits reported on line 14.

Balance Due or Overpayment:

• If line 13 exceeds line 14, enter the balance due on line 15
• If line 14 exceeds line 13, enter the overpayment on line 16 and elect to apply it to the next return or request a refund
• You don’t have to pay if line 15 is under $1.00
• If you were required to make federal tax deposits, pay the amount on line 15 by electronic funds transfer (EFT)

9. Determine Form 943-A Requirement

Semiweekly Schedule Depositors: If you were a semiweekly schedule depositor during any part of 2018, you must complete Form 943-A (Agricultural Employer’s Record of Federal Tax Liability) and attach it to Form 943. Do not complete line 17 if you file Form 943-A.

Definition: You are a semiweekly schedule depositor if your total taxes after adjustments and credits during the lookback period (2016 for tax year 2018) exceeded $50,000.

10. Complete Line 17 (Monthly Summary) When Required

Complete line 17 (Monthly Summary of Federal Tax Liability) only if you meet both of the following conditions:

• You were a monthly schedule depositor for the entire year 2018
• Line 13 (total taxes after adjustments and credits) is $2,500 or more

Monthly Schedule Depositor Definition: You are a monthly schedule depositor if your total taxes after adjustments and credits reported for the lookback period (2016) were $50,000 or less.

Report tax liability for each month (January through December) and sum on line M. The amount on line M must equal the amount on line 13.

Exception: If line 13 is less than $2,500, do not complete line 17 or Form 943-A. You may pay the tax due with your return if filed on time.

11. Authorize Third-Party Designee if Applicable

Complete the Third-Party Designee section if another person may discuss this return with the IRS. Provide the designee’s name, phone number, and 5-digit personal identification number (PIN).

12. Sign, Date, and Submit Form 943

The employer or authorized officer must sign Form 943 under penalties of perjury. If a paid preparer completed the return, the preparer must also sign, enter their Preparer Tax Identification Number (PTIN), and provide firm information.

Verification Requirements:

• Ensure all entity information (name, EIN, address) is accurate and matches IRS records
• File by January 31, 2019, or February 11, 2019, if deposits were made on time in full payment
• Reconcile Form 943 totals with Forms W-2 and W-3 (federal income tax withheld, social security wages, and Medicare wages should agree)

Year-Specific Updates for 2018

Social Security and Medicare Tax Rates:

• Social security tax rate: 6.2% each for employee and employer (12.4% total)
• Social security wage base limit: $128,400 per employee
• Medicare tax rate: 1.45% each for employee and employer (2.9% total)
• No wage base limit applies to the Medicare tax

Additional Medicare Tax:

• Rate: 0.9% on employee wages exceeding $200,000
• Employee-only tax with no employer matching contribution
• Employer withholding threshold: $200,000, regardless of the employee’s filing status

Qualified Small Business Payroll Tax Credit:

• Available on line 12 for qualified research activities
• Requires attachment of Form 8974
• Credit applies against the employer’s share of social security tax
• Maximum credit of $250,000 per year for qualified small businesses

Form 943-A Requirement:

• Required for all semiweekly schedule depositors
• Must be attached when line 13 is $2,500 or more, and the employer was a semiweekly depositor during any part of the year
• Failure to attach Form 943-A when required may delay processing

Electronic Filing and Payment:

• Federal tax deposits must be made by electronic funds transfer (EFT)
• Deposits of $2,500 or more throughout the year must use EFT
• The Electronic Federal Tax Payment System (EFTPS) is the primary method for making deposits
• Form 943-V payment voucher is used only for payments under $2,500 made with a timely filed return

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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.