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Publication 225

Chapter 13
Employment Taxes(p77)

What's New for 2013(p77)

Social security and Medicare tax for 2013.(p77)
The employee tax rate for social security is 6.2%. Previously, the employee tax rate for social security was 4.2%. The employer tax rate for social security remains unchanged at 6.2%. The social security wage base limit is $113,700.
The Medicare tax rate is 1.45% each for the employee and employer, unchanged from 2012. There is no wage base limit for Medicare tax.
Additional Medicare Tax.(p77)
In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Additional Medicare Tax is only imposed on the employee. There is no employer share of Additional Medicare Tax. All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 threshold.
For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments, in section 15 of Publication 15 (Circular E), Employer's Tax Guide. For more information on Additional Medicare Tax, visit and enter "Additional Medicare Tax" in the search box.
Leave-based donation programs to aid victims of Hurricane Sandy.(p77)
Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made before January 1, 2014, to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy. The donated leave will not be included in the income or wages of the employee. The employer may deduct the cash payments as business expenses or charitable contributions. For more information, see Notice 2012-69, 2012-51 I.R.B. 712, available at
Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans extended.(p77)
The work opportunity tax credit is now available for eligible unemployed veterans who begin work before January 1, 2014. Previously, the credit was available for unemployed veterans who began work on or after November 22, 2011, and before January 1, 2013. Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. For more information, visit and enter "work opportunity credit" in the search box.

What's New for 2014(p77)

Social security and Medicare tax for 2014.(p77)
The employee and employer tax rates for social security and the maximum amount of wages subject to social security tax for 2014 will be discussed in Publication 51 (Circular A), Agricultural Employer's Tax Guide (For use in 2014).
The Medicare tax rate for 2014 will also be discussed in Publication 51 (Circular A) (For use in 2014). There is no limit on the amount of wages subject to Medicare tax.


Additional employment tax information for farmers.(p77)
See Publication 51 (Circular A) for more detailed guidance on employment taxes. For the latest information about employment tax developments impacting farmers, go to
Correcting a previously filed Form 943.(p77)
If you discover an error on a previously filed Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, make the correction using Form 943-X, Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund. Form 943-X is filed separately from Form 943. For more information on correcting Form 943, see the Instructions for Form 943-X.
Federal tax deposits must be made by electronic funds transfer.(p77)
You must use electronic funds transfer to make all federal tax deposits. Generally, electronic funds transfers are made using the Electronic Federal Tax Payment System (EFTPS). If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. EFTPS is a free service provided by the Department of Treasury. Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee.
For more information on making federal tax deposits, see section 7 of Publication 51 (Circular A). To get more information about EFTPS or to enroll in EFTPS, visit or call 1-800-555-4477 or 1-800-733-4829 (TDD). Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started.

Important Dates for 2014(p78)

You should take the action indicated by the dates listed. See By February 15 and On February 16 for Form W-4, Employee's Withholding Allowance Certificate, information. Due dates for deposits of withheld federal income taxes, social security taxes, and Medicare taxes are not listed here. For these dates, see Publication 509, Tax Calendars (For use in 2014).
If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, the due date is the next business day. A statewide legal holiday delays a filing or furnishing due date only if the IRS office where you are required to file a return or furnish a form is located in that state. For any due date, you will meet the "file" or "furnish" date requirement if the envelope containing the tax return or form is properly addressed, contains sufficient postage, and is postmarked by the U.S. Postal Service by the due date, or sent by an IRS-designated delivery service by the due date. See Private delivery services in Publication 51 (Circular A).
Federal tax deposits can only be made by electronic funds transfer and are governed by legal holidays in the District of Columbia. Statewide holidays no longer apply. For a list of legal holidays that delay the due date of a federal tax deposit, see section 7 of Publication 51 (Circular A).
Fiscal year taxpayers.(p78)
The due dates listed below apply whether you use a calendar or a fiscal year.
By January 31(p78)
  • File Form 943 with the IRS. If you deposited all Form 943 taxes when due, you have 10 additional days to file.
  • Furnish each employee with a completed Form W-2, Wage and Tax Statement.
  • Furnish each recipient to whom you paid $600 or more in nonemployee compensation with a completed Form 1099 (for example, Form 1099-MISC).
  • File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, with the IRS. If you deposited all the FUTA tax when due, you have 10 additional days to file.
  • File Form 945, Annual Return of Withheld Federal Income Tax, with the IRS to report any nonpayroll income tax withheld during 2013. If you deposited all Form 945 taxes when due, you have 10 additional days to file.
By February 15(p78)
Ask for a new Form W-4 or Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, from each employee who claimed exemption from federal income tax withholding last year.
On February 16(p78)
Any Form W-4 claiming exemption from withholding for the previous year has now expired. Begin withholding for any employee who previously claimed exemption from withholding but has not given you a new Form W-4 for the current year. If the employee does not give you a new Form W-4, withhold taxes based on the last valid Form W-4 you have for the employee that does not claim exemption from withholding or, if one does not exist, as if he or she is single with zero withholding allowances. If the employee furnishes a new Form W-4 claiming exemption from withholding after February 15, you may apply the exemption to future wages, but do not refund taxes withheld while the exempt status was not in place.
By February 28(p78)
File paper Forms 1099 and 1096. File Copy A of all paper Forms 1099 with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with the IRS. For electronically filed returns, see By March 31 below.
File paper Forms W-2 and W-3. File Copy A of all paper Forms W-2 with Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration (SSA). For electronically filed returns, see By March 31 below.
By March 31(p78)
File electronic Forms W-2 and 1099. File electronic Forms W-2 with the SSA and Forms 1099 with the IRS. For more information on reporting Form W-2 information to the SSA electronically, visit the SSA's Employer W-2 Filing Instructions & Information webpage at For information on filing information returns electronically with the IRS, see Publication 1220, Specifications for Filing Forms 1097, 1098, 1099, 3921, 3922, 5498, 8935, and W-2G Electronically.
By April 30, July 31, October 31, and January 31(p78)
Deposit FUTA taxes. Deposit FUTA tax due if it is more than $500.
Before December 1(p78)
Remind employees to submit a new Form W-4 if their withholding allowances have changed or will change for the next year.


You are generally required to withhold federal income tax from the wages of your employees. You may also be subject to social security and Medicare taxes under the Federal Insurance Contributions Act (FICA) and federal unemployment tax under the Federal Unemployment Tax Act (FUTA). You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. This chapter includes information about these taxes.
You must also pay self-employment tax on your net earnings from farming. See chapter 12 for information on self-employment tax.


Useful items

You may want to see:

 15 (Circular E), Employer's Tax Guide
 15-A Employer's Supplemental Tax Guide
 15-B Employer's Tax Guide to Fringe Benefits
 51 (Circular A), Agricultural Employer's Tax Guide
 926 Household Employer's Tax Guide
Form (and Instructions)
 W-2: Wage and Tax Statement
 W-4: Employee's Withholding Allowance Certificate
 W-9: Request for Taxpayer Identification Number and Certification
 940: Employer's Annual Federal Unemployment (FUTA) Tax Return
 943: Employer's Annual Federal Tax Return for Agricultural Employees
 943-X: Adjusted Employer's Annual Federal Tax Return for Agricultural Employees or Claim for Refund
See chapter 16 for information about getting publications and forms.

Farm Employment(p78)

In general, you are an employer of farmworkers if your employees do any of the following types of work. For more information, see Publication 51 (Circular A).
Generally, a worker who performs services for you is your employee if you have the right to control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed. You are responsible for withholding and paying employment taxes for your employees. You are also required to file employment tax returns. These requirements do not apply to amounts that you pay to independent contractors. See Publication 15-A for more information on how to determine whether an individual providing services is an independent contractor or an employee.
If you employ a family of workers, each worker subject to your control (not just the head of the family) is an employee.
Special rules apply to crew leaders. See Crew Leaders, later.

Employer identification number (EIN).(p79)

If you have employees, you must have an EIN. If you do not have an EIN, you may apply for one online. Go to and click on the Apply for an EIN Online link under Tools. You may also apply for an EIN by calling 1-800-829-4933 or 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). The hours of operation for both numbers are Monday–Friday form 7:00 a.m.–7:00 p.m. local time (Alaska and Hawaii follow Pacific time). You can also fax or mail Form SS-4, Application for Employer Identification Number, to the IRS.

Employee's social security number (SSN).(p79)

An employee who does not have an SSN should submit Form SS-5, Application for a Social Security Card, to the Social Security Administration (SSA). Form SS-5 is available from any SSA office or by calling 1-800-772-1213 (operates 24 hours per day). It is also available from the SSA's website at
The employee must furnish evidence of age, identity, and U.S. citizenship or lawful immigration status permitting employment with the Form SS-5. An employee who is age 18 or older must appear in person with this evidence at an SSA office.

Form I-9.(p79)

You must verify that each new employee is legally eligible to work in the United States. This includes completing the Form I-9, Employment Eligibility Verification. Form I-9 is available from the U.S. Citizenship and Immigration Services (USCIS) offices or by calling the Bureau of Citizenship and Immigration Services Forms Request Line at 1-800-870-3676. Form I-9 is also available from the USCIS website at You can also contact the USCIS at 1-800-375-5283 for more information.

New hire reporting.(p79)

You are required to report any new employee to a designated state new hire registry. Many states accept a copy of Form W-4 with employer information added. Visit the Office of Child Support Enforcement website at for more information.