What IRS Form 943 (2020) Is For
IRS Form 943 (2020) serves as the employer’s annual federal tax return for agricultural employees, specifically used to report federal income tax withholding, Social Security, and Medicare taxes on wages paid to farmworkers. This form applies to agricultural employers who paid employees cash wages subject to Social Security and Medicare taxes or federal income tax. Employers must file if they paid $150 or more in cash wages to any single farmworker or $2,500 or more in total wages to all farmworkers during the calendar year.
Unlike Form 941, which covers non-agricultural employees and is filed quarterly, Form 943 is filed annually and focuses solely on agricultural operations. It ensures accurate reporting of wages paid, income tax withheld, and Medicare taxes for those who employ one or more farmworkers under the federal government’s agricultural employment tax requirements.
If you need to confirm whether 2020 deposits were recorded correctly, request an IRS account transcript before completing the form.
When You’d Use IRS Form 943 (2020)
You would file or amend IRS Form 943 (2020) when addressing a late submission, correction, or adjustment for agricultural employees within that tax year.
- Responding to IRS Notices: Employers may need to file when the IRS issues a notice identifying missing or unfiled returns or outstanding tax liability.
- Correcting Payroll Errors: Form 943 should be used to fix reporting mistakes involving employee wages, federal income tax withheld, or Medicare tax for 2020.
- Claiming Missed Credits: Employers can amend the return to claim eligible COVID-19 employment credits or Social Security tax deferrals.
- Amending Prior Returns: Corrections for a previously filed 2020 return must be made using Form 943-X, ensuring all data reflects the same calendar year reporting period.
If the IRS has already issued a notice for a missing 2020 return, reviewing the IRS collection process can help you understand what steps come next and how to respond.
Key Rules or Details for 2020
The 2020 version of IRS Form 943 included several temporary provisions related to COVID-19 that affected how agricultural employers reported wages and credits.
- Qualified Sick and Family Leave Credits: Employers could claim credits for qualified sick and family leave wages paid under COVID-19 laws, which were exempt from the employer portion of Social Security tax.
- Employee Retention Credit: Agricultural employers who retained staff despite disruptions could claim this credit to offset federal income tax liability on the return.
- Payroll Tax Deferrals: The employer’s share of Social Security and Medicare taxes on wages paid from March 27 to December 31, 2020, could be deferred to a later payment date.
- Employee Deferrals: Workers earning under $4,000 biweekly could defer the employee share of Social Security tax due the following year.
- Advance Payments via Form 7200: Employers who received advance credits through Form 7200 were required to reconcile those amounts on Form 943, line 14g.
If penalties were assessed for late filing or missed deposits, you may qualify for penalty abatement if you can show reasonable cause.
Step-by-Step (High Level)
Employers should follow a structured process to ensure compliance and accuracy when completing and filing IRS Form 943 (2020).
- Gather Payroll Records: Collect documentation of paid wages, income tax withholding, Social Security, and Medicare taxes for all farmworkers employed during 2020.
- Use the Correct Year Form: To report 2020 data, always use the official 2020 version of Form 943; do not use current or prior-year forms.
- Complete and Attach Required Schedules: Attach Form 943-A if you followed a semiweekly deposit schedule and Schedule R if filing as part of a group or aggregate operation.
- Verify Employer Information: Confirm that your Employer Identification Number (EIN), business address, and employment details are accurate and complete.
- Submit the Return: Mail your completed form to the correct IRS mailing address or file online using an authorized e-file provider.
- Retain Records: Maintain copies of all forms, deposits, and money orders for at least four years, as the IRS may request verification for the previous year’s filing.
If you cannot pay the full balance after filing, applying for an IRS payment plan can help you manage the remaining 2020 liability over time.
Common Mistakes and How to Avoid Them
When filing IRS Form 943 (2020), agricultural employers often make common errors that lead to delays, penalties, or correction notices from the IRS.
- Confusing Form 943 with Form 941: Use Form 943 only for farmworkers; non-agricultural employees must be reported on Form 941, which is filed quarterly.
- Ignoring the Social Security Wage Base: Stop withholding Social Security tax once an employee’s annual wages reach $137,700 for 2020 to avoid overpayment.
- Incorrectly Reporting COVID-19 Credits: Do not include qualified sick and family leave wages in employer Social Security tax calculations, as these wages are exempt.
- Missing Deposit Deadlines: Follow your assigned monthly or semiweekly deposit schedule and make deposits on the next business day when required
- Using Outdated Mailing Addresses: Always check the IRS mailing address list for the correct location before filing.
- Failing to Reconcile with W-2 Totals: Ensure totals for federal income tax withheld, Social Security, and Medicare wages match those reported on your Form W-3 transmittal.
Issues like late deposits, COVID-19 credit miscalculations, or worker misclassification can quickly escalate into payroll tax problems that require expert assistance.
What Happens After You File
After submitting IRS Form 943 (2020), the IRS typically processes electronic filings within a few weeks and paper submissions within six to eight weeks. Employers may receive notices if errors, missing data, or balance discrepancies occur. If you owe unpaid tax, payment can be made electronically or by mail using money orders or approved payment methods.
Penalties and interest accrue monthly until the balance is settled. If you cannot pay in full, you may apply for an installment agreement through the IRS. Keep all acknowledgment records as proof of your completed filing.
FAQs
How does federal income tax withholding apply to IRS Form 943 (2020)?
Federal income tax withholding applies to annual cash wages paid to farm workers by agricultural employers. It must be reported on Form 943 by the return’s due date each year.
How are Medicare taxes reported for agricultural employees?
Agricultural employers must report Medicare taxes on Form 943, including employer and employee portions, and account for any additional Medicare tax withheld during the year.
What federal income tax must be included on Form 943?
Employers should include the federal income tax withheld from employee wages and ensure all reported amounts match the total wages paid to farm workers.
How do Social Security and Medicare taxes affect Form 943 filing?
Social Security and Medicare taxes must be calculated according to special 2020 rules, with attention to wage limits and deposit due dates.
Who is required to file Form 943 for agricultural employees?
Employers who paid annual cash wages of $150 or more to any farm worker or $2,500 or more in total wages to all agricultural employees must file Form 943.
