What IRS Form 943 (2016) Is For

IRS Form 943 (2016) is the employer’s annual federal tax return explicitly used for reporting wages paid to agricultural employees and the corresponding employment taxes. This includes federal income tax withholding and Social Security and Medicare taxes. Employers must file this form if they paid cash wages of $150 or more to any individual farmworker, or if the total wages paid to all farmworkers during the year reached $2,500 or more. The form ensures that taxes owed on agricultural labor are correctly reported and that both employees and employers remain compliant with federal tax laws.

Form 943 differs from Form 941 because it applies only to agricultural employment, not general business operations. Farmers, ranchers, and other agricultural businesses must use Form 943 to report all applicable wages, withholdings, and employer contributions for Social Security and Medicare.

When You’d Use IRS Form 943 (2016)

You would use IRS Form 943 (2016) when any of the following filing situations apply:

1. Late Filing Situation: You may need to file IRS Form 943 (2016) late if you recently received an IRS notice indicating that a prior year’s agricultural employment taxes were not filed or paid.
   
   
2. Amended Filing: You should file an amended return if you have discovered an error in wages, withheld taxes, or prior payments that requires correction.
   
   
3. Overpayment Refund Claim: You should request a refund for overpaid taxes, provided that you claim within the legal period allowed under IRS rules.
   
   
4. Previously Unreported Wages: You must submit the form if you later determine that you reached the required filing thresholds but did not report wages for agricultural employees in 2016.
   
   
5. Reclassification of Worker Status: You must file Form 943 if the IRS has determined that a worker previously treated as an independent contractor should have been classified as an employee for tax purposes.

Key Rules or Details for 2016

These rules determine the correct calculations for Social Security and Medicare taxes and apply to them. They also establish the submission and deposit deadlines.

1. Social Security Tax Rates: For 2016, the Social Security tax rate was 6.2 percent each for the employee and employer, with a maximum wage base limit of $118,500 per employee.
   
   
2. Medicare Tax Rates: The Medicare tax rate in 2016 was 1.45 percent for both the employee and employer, and there was no wage base limit for these taxes.
   
   
3. Additional Medicare Tax: Employers were required to withhold a further 0.9 percent on wages exceeding $200,000 per employee, regardless of the employee’s filing status or other income.
   
   
4. Due Dates: The filing deadline for IRS Form 943 (2016) was January 31, 2017. Employers who made all required deposits on time were eligible for an extended due date of February 10, 2017.
   
   
5. Electronic Filing and Deposits: Employers with 250 or more W-2 forms were required to file electronically, and all federal tax deposits had to be made through the Electronic Federal Tax Payment System (EFTPS).
   
   
6. State Employment Taxes: Some states require separate filing for agricultural wages, so employers must verify state-specific employment tax obligations to ensure compliance.

Step-by-Step (High Level)

Following each step carefully helps avoid delays, penalties, or the need for later corrections.

1. Gather Payroll and Deposit Records: Collect detailed payroll information for all agricultural employees, including cash wages, federal income tax withheld, and tax deposit receipts for 2016.
   
   
2. Complete the Correct Version: Use the official 2016 version of IRS Form 943 to ensure all entries correspond with the correct year’s Social Security and Medicare tax rates.
   
   
3. Attach Required Forms: Include Form 943-A if you were a semiweekly depositor, and attach Form W-3 with copies of all W-2s issued to your agricultural employees.
   
   
4. Select the Correct Filing Method: Submit your completed return either by mailing it to the appropriate IRS address or filing it online using an authorized electronic filing provider.
   
   
5. Keep Copies for Records: Retain copies of all forms, schedules, and proof of submission for at least four years to support future audits, refund claims, or verification requests.

Common Mistakes and How to Avoid Them

The following are common errors that often result in penalties, IRS correspondence, and guidance on avoiding them.

1. Confusing Form 941 and Form 943: Form 943 applies only to agricultural employers, while Form 941 is for non-agricultural employees; reporting the same wages on both forms results in duplication and penalties.
   
   
2. Missing Filing Thresholds: Employers must file if they paid any worker $150 or more in cash wages, or if total wages to all agricultural employees reached $2,500; failing to apply these rules may lead to noncompliance.
   
   
3. Incorrect Wage Limits: Employers should not report Social Security wages above $118,500 per employee for 2016 and must report all Medicare wages without a cap to ensure accurate tax calculation.
   
   
4. Misclassifying Workers: A worker who meets the definition of an employee under common law should not be treated as an independent contractor, as misclassification can result in additional taxes and penalties.
   
   
5. Deposit Schedule Errors: Employers must make tax deposits according to their assigned monthly or semiweekly deposit schedule; late deposits may trigger penalties and interest.

What Happens After You File

After submitting IRS Form 943 (2016), the IRS generally processes the return within several weeks, although late filings may require additional verification. The IRS will contact you if discrepancies, missing information, or additional taxes are owed. Employers who owe a balance may request an installment agreement or penalty relief if they qualify under reasonable cause. Keeping all payroll records, deposit confirmations, and IRS correspondence for at least four years is recommended to ensure proper documentation for future reviews or refund claims.

FAQs

How does federal income tax withholding apply to IRS Form 943 (2016)?

Federal income tax withholding applies to wages paid to agricultural employees subject to federal taxation. Employers must report these amounts on the tax return for agricultural workers to ensure compliance with federal law and accurate withholding of employee liabilities.

Are Medicare taxes required for all agricultural employees under IRS Form 943 (2016)?

Yes, all agricultural employees whose wages are subject to Medicare taxes must have these amounts withheld and reported accurately on the return of farming employees. Employers must also match employee contributions to ensure proper funding for Medicare benefits. 

Can filing a late or amended IRS Form 943 (2016) provide any benefits?

Filing a late or corrected return for agricultural employees allows employers to claim potential refunds for overpaid taxes and correct previous reporting errors. It also helps maintain compliance and preserves eligibility for IRS payment arrangements or penalty relief services.

What happens if an employer’s agricultural wages are not subject to federal income tax withholding or Social Security?

If wages paid to certain workers are not subject to withholding under federal law, employers are not required to report those wages on IRS Form 943 (2016). However, they must retain documentation explaining the reason for exclusion to avoid future tax issues related to classification or benefits.