What IRS Form 943 (2021) Is For
IRS Form 943 (2021) is the employer’s annual federal tax return for agricultural employers who paid wages to one or more farm employees during the 2021 tax year. It reports federal income tax withholding, Social Security and Medicare taxes, and any additional Medicare tax owed on agricultural wages. Employers who paid agricultural employees cash wages of $150 or more, or whose total wages reached $2,500 or more for the year, must file Form 943.
The form applies only to wages paid to agricultural employees, including farmworkers engaged in farming business operations such as planting, harvesting, or livestock handling. If an employer also paid wages to non-agricultural workers, those wages must be reported separately using Form 941 or Form 944, since each return is treated independently under IRS filing rules. Before filing, employers can request an IRS account transcript to verify that all 2021 deposits and reported wages match IRS records.
When You’d Use IRS Form 943 (2021)
Employers use IRS Form 943 (2021) in several specific filing circumstances related to agricultural wage reporting and federal employment taxes.
- Late Filing Situations: You should file IRS Form 943 (2021) if you missed the original due date of January 31, 2022, or the extended date of February 10, 2022, for timely depositors, to report wages paid and taxes withheld.
- IRS Notices Received: You must file immediately if you receive IRS notices requesting or demanding a missing tax return for agricultural employees covered under the 2021 tax year.
- Unreported Wages: You must file when you discover that one or more farmworkers’ wages were paid but not previously reported for federal income tax withholding, Social Security, and Medicare taxes.
- Amended Returns: You should file Form 943-X to correct prior errors, including incorrect taxable wages, inaccurate federal income tax withheld, or unclaimed COVID-related employment tax credits.
If the IRS has issued a letter demanding a missing 2021 return, reviewing the IRS collection process helps employers understand what actions the IRS may take next.
Key Rules or Details for the 2021 Tax Year
These details affected how the IRS reported and processed wages, credits, and deposits.
- COVID-Related Tax Credits: Employers could claim the Employee Retention Credit and credits for qualified sick and family leave wages for eligible periods during 2021, subject to the applicable time limits and documentation requirements.
- Deferral of Social Security Taxes: As part of the continuing tax relief measures, employers who deferred the employer portion of Social Security taxes in 2020 were required to repay partially by December 31, 2021.
- Wage Base Limits: The 2021 Social Security wage base limit was $142,800, while Medicare wages had no limit. All taxable wages above this threshold were still subject to the additional Medicare tax.
- Deposit Schedule Requirements: Employers must follow a monthly or semiweekly deposit schedule based on their total federal tax liability and prior-year deposit history.
- Electronic Funds Transfer Requirement: All employment tax deposits must be made using the Electronic Federal Tax Payment System (EFTPS) rather than paper checks or money orders.
- End of Special Relief Programs: The 2021 tax year marked the final period for certain COVID-era tax deferrals and employment tax credits, which were discontinued for subsequent tax years.
If penalties were assessed for late filing or incorrect deposits, employers may request penalty abatement if they can demonstrate reasonable cause.
Step-by-Step (High Level)
Employers should follow these high-level steps to ensure IRS Form 943 (2021) is completed accurately and filed in compliance with federal requirements.
- Collect Payroll Records: Gather all payroll data, including cash wages, taxable wages, and total wages paid to agricultural employees during the 2021 calendar year.
- Verify Employer Identification Number (EIN): Confirm that your EIN is valid and matches IRS records before preparing the tax return to prevent filing errors or delays.
- Complete Form 943 (2021): Calculate federal income tax withheld, Social Security and Medicare taxes, and any additional Medicare tax owed on agricultural employees’ wages.
- Attached are the required schedules: Form 943-A for semiweekly depositors and any worksheets used for employment tax credit calculations or adjustments.
- File and Pay: Submit the employer’s annual federal tax return electronically or by mail, and remit any tax owed using electronic funds transfer, certified check, or money order.
- Keep Documentation: Maintain complete payroll records, deposit confirmations, and proof of filing for at least four years in case of IRS inquiries or audits.
Employers unable to pay their full 2021 balance can apply for an IRS payment plan to avoid further collection actions and reduce financial strain.
Common Mistakes and How to Avoid Them
Avoiding common filing mistakes is essential when submitting IRS Form 943 (2021) to prevent penalties, delays, and unnecessary IRS correspondence.
- Mixing Agricultural and Non-Farm Wages: Report only agricultural employees’ wages on IRS Form 943 (2021) and file a separate return for non-farm employees using Form 941 or Form 944.
- Incorrect Wage Base Calculations: Apply the correct 2021 Social Security wage base of $142,800 and ensure that all Medicare wages are accurately reported since there is no income limit for Medicare tax.
- Missed Deposit Deadlines: Follow the appropriate monthly or semiweekly deposit schedule to avoid the failure-to-pay penalty and additional interest charges on unpaid tax amounts.
- Omitting Forms W-2 or W-2c: Provide accurate Forms W-2 to all employees covered under the tax return for agricultural employees and issue Form W-2c promptly to correct any errors.
- Ignoring Tax Deposit Requirements: Use the Electronic Federal Tax Payment System (EFTPS) to deposit employment taxes once your total tax liability exceeds $2,500 during the tax year.
- Errors in COVID Credit Claims: Use the correct worksheets to calculate COVID-related credits and ensure that the same wages are not claimed for Employee Retention Credit and PPP loan forgiveness.
Issues such as incorrect wage reporting, missed deposit deadlines, or COVID-related credit errors can quickly escalate into payroll tax problems that require professional support.
What Happens After You File
Once you file IRS Form 943 (2021), the IRS typically takes six to eight weeks to process a late or amended return. If you owe tax liability, penalties and interest begin accruing from the original due date until full payment is received.
Employers may request penalty relief if they demonstrate reasonable cause for the late filing or payment. If full payment cannot be made immediately, a payment plan or installment agreement can be arranged to avoid further collection actions.
FAQs
How should federal income tax withheld be reported on IRS Form 943 (2021)?
Federal income tax withheld from agricultural employees’ wages must be reported accurately in the designated sections of IRS Form 943 (2021). Employers must ensure all workers have a valid taxpayer identification number to prevent errors and avoid backup withholding requirements.
Who qualifies as an agricultural employee under IRS Form 943 (2021)?
Agricultural employees include farmworkers who cultivate, care for livestock, or harvest crops. Employers must maintain accurate payroll records and verify each worker’s valid taxpayer identification number to comply with federal reporting rules and avoid issues with backup withholding.
What are the reporting rules for annual cash wages on IRS Form 943 (2021)?
Annual cash wages of $150 or more paid to a farmworker must be reported on IRS Form 943 (2021). Employers must include the employee’s valid taxpayer identification number to ensure proper withholding and prevent backup withholding for incorrect or missing information.
When does the minimum penalty apply for IRS Form 943 (2021)?
A minimum penalty applies when IRS Form 943 (2021) is filed late, or federal employment taxes are not deposited as required. Employers can reduce or eliminate penalties by maintaining accurate payroll records and ensuring every employee provides a valid taxpayer identification number.
