A Guide For Farmers, Growers And Crew Leaders
Una Guía para Agricultores, Cultivadores y Capataces

About This Booklet

If you own or operate a farm, ranch, orchard or other agricultural enterprise, or if you are a grower or crew leader, this booklet has important information for you. It's divided into three parts. Part 1 tells what you're paying for with your Social Security and Medicare taxes. Part 2 tells you how to report your employee's income to Social Security and explains why it is important that you do so. Part 3 tells you how to report your own income to Social Security—whether you're an owner/operator, partner, renter, share farmer or crew leader.

Immediately following the English version of this booklet, you will find the Spanish version.

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Part 1—Social Security's Benefit Package

It has been said that one of the downsides to being self–employed is not having the “package of benefits” available to many employees, especially those who work for large organizations. A similar lack of benefits is cited as a fact of life for most farm workers. But such thinking fails to take into account the valuable benefits available to you and your employees because you pay Social Security and Medicare taxes.

Every time you file a tax return and pay Social Security and Medicare taxes for yourself, or every time you report wages for an employee by submitting a W–2 form to Social Security and giving a copy to your employee, you are contributing to that benefit package. Generally, the more income on a person's record, the higher his or her Social Security benefit will be. So, accurate income and wage reporting today means higher benefits tomorrow for you and your family and for your employees and their families.

And what benefits are you paying for with your Social Security and Medicare taxes? It's a lot more than the retirement benefits most people usually associate with Social Security. Your taxes pay for the following:

• Retirement Insurance—Benefits paid every month to retired workers—as early as age 62.
• Disability Insurance—Benefits paid every month to workers of all ages who have a severe disability. In some cases, a young worker may qualify for a disability benefit with as little as one and one–half years of work.
• Family Insurance—Benefits paid every month to the spouse and children of retired or disabled workers.
• Survivors Insurance—Benefits paid every month to the widow or widower and children of a deceased worker. In some cases the family of a young deceased worker can receive these benefits even if the worker had as little as one and one–half years of work.
• Medicare Insurance—Help with hospital bills, as well as limited coverage of skilled nursing facility stays, hospice care and other medical services.

You can see that accurate reporting is a lot more than just a tax matter because it has a direct bearing on the eligibility for, and amount of, any Social Security benefits payable to you and your employees and your families. That's why we always stress the importance of recording the right name, Social Security number, and earnings for yourself and each of your employees. Make sure you use the name and number exactly as they're shown on the Social Security card.

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Part 2—Reporting Income Of Farm Workers

Most farm workers are “covered” by Social Security. This means that Social Security and Medicare taxes must be paid on their earnings. If you employ “covered” workers, you must keep records of their wages, withhold their Social Security and Medicare taxes, report their wages and pay the corresponding taxes. If you don't report the wages and pay the taxes due, you may be subject to a penalty. If a farm worker complains to Social Security that wages were not reported, and if he or she has proof of those wages, the violation will be reported to the Internal Revenue Service  (IRS).

Farm workers under your direction and control cannot be considered independent contractors. They are employees and their wages must be reported to Social Security.

What Farm Workers Are “Covered”?

• you pay the employee $150 or more in cash wages during the calendar year for farm work; or
• you pay the employee less than $150 in cash wages, but your total expenses for agricultural labor are $2,500 or more in a year.

However, if you employ seasonal hand–harvest laborers who commute to work daily from their homes, who are paid on a piece–rate basis and who did less than 13 weeks of farm work the previous year, this work is “covered” by Social Security only if you pay the employee at least $150 in cash for the job.

Who Is The “Employer” Of The Farm Workers?

Some farmers hire crew bosses who are independent contractors to handle all their wage–reporting responsibilities. However, if a written agreement states that the crew leader is the farmer's employee, the farmer is responsible for all wage–reporting and recordkeeping. If no written agreement exists and:

• the crew leader pays the workers (even if it is for the farmer), then the crew leader is the employer; or
• the farmer or the farmer's agent pays the workers, then whoever has the final right to control the workers on the job is the employer.

NOTE: If you are an employer of farm workers, you may need to register with the U.S. Department of Labor as a farm labor contractor. For more information, contact the Department of Labor's Wage and Hour Division listed in most telephone directories under U.S. Government, Department of Labor, Employment Standards Administration.

How To Prepare A Written Agreement

• name and address of the farmer and the crew leader;
• location of farm, kind of crop and operation and approximate dates of the work;
• statement that the crew leader will furnish a crew to do the work;
• statement that the crew leader and crew workers are employees of the farmer, who will report their wages and pay Social Security and Medicare taxes that are due; and
• statement about charges made by the crew leader for services, wages to be paid to workers, and about any transportation, housing and insurance to be provided.

Responsibilities Of Employer

• Keep a record for each worker—Show the worker's name, Social Security number (copy it only from the Social Security card), cash wages paid and taxes you withhold. If the farm worker is subject to the Migrant and Seasonal Agricultural Workers Protection Act, the record must also show:  a) the rate of pay; b) total hours worked each day and each week; c) the date that wages are paid; and d) the period of time covered by the payment.
• Collect and pay Social Security taxes—Generally you must pay the tax periodically during the year, using deposit coupons from Form 8109, Federal Tax Deposit Coupon Book, available from the Internal Revenue Service (IRS).
• Prepare Form 943—Once a year you must complete IRS Form 943 (Employers Annual Tax Return For Agricultural Employees). It is normally due on January 31 for wages paid in the preceding year. You have until February 10 if you deposited all taxes with your coupons for the preceding year.
• Provide a pay statement and prepare a W–2 form—The Migrant and Seasonal Agricultural Workers Protection Act requires that you provide your employees with pay statements. After the year ends, prepare a W–2 (Wage and Tax Statement) for each employee who was paid any wages. Include the cash value of any payment that was not in cash in the “Wages, tips, other compensation” block of the W–2, but show only the cash wages in the “Social Security wages” block and the “Medicare wages and tips” block. Send Copy A of the W–2 along with a W–3 Form (Transmittal of Income and Tax Statements) to the Social Security Administration by the last day of February following the year in which wages were paid. The address for your area is in the instructions for Form W–3. Give copies of the W–2 to the employee by January 31 of the year following the year he/she earned the wages.

If the farm worker moves frequently, and has trouble getting mail, you can give him or her a W–2 when the job ends instead of waiting until January 31 of the next year.

For more information, get IRS Publication 51, Circular A (Agricultural Employer's Tax Guide). You can order IRS forms and publications by calling 1–800–Tax–Form (1–800–829–3676).

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Part 3—Reporting Your Own Income To Social Security

Just as important as reporting your employees' income to Social Security is making sure you get proper credit for your own earnings. Farmers are “covered” under Social Security just as other self–employed people are. You may be an owner–operator, partner, landlord who takes an active role in the farm operation, tenant, renter, share farmer or crew leader who is an independent contractor.

Types Of Farm Arrangements

Family Arrangement

Usually on a family–operated farm, the head of the household is considered to be self–employed and the farm income is credited to that person. This is true even though other members of the family may help on the farm. In some cases, all the members of the family have a partnership and all of them earn Social Security credit based on the farm income. If a husband and wife operate a farm as a partnership, they must report their share of the profits for Social Security purposes separately, even though they file a joint income tax return.

Farm Partnership

A farm partnership is formed when two or more persons get together to carry on a farming operation. The agreement between partners is usually written, but it can be oral.

     Signs that a partnership exists include:

• the intent of the parties to form a partnership;
• contribution of land or money or services by each;
• the right of each partner to take part in management;
• the sharing of profits or losses in certain proportion;
• mutual agency, where each partner can act for the other; or
• joint liability, so that each partner is liable for debts incurred through the partnership.

Each partner is responsible for reporting his own share of the profits for Social Security purposes.

Farm Rental Agreements

Probably no two farm rental agreements are exactly alike. But all are similar in that the landlord agrees to let the tenant use the farm to produce farm products and the tenant agrees to pay the landlord in cash or crop shares for use of the property

If you own land or rent land from someone else, and then rent or lease that land to another person, you are a “landlord”

The arrangement between the landlord and the tenant can be oral or written. The advantage of a written arrangement is that it makes it easier to establish intent. An oral agreement may later make it necessary to obtain statements from the tenant and others who know the facts about how the two planned to operate.

The cash or crop share that a landlord receives from a tenant can be included as farm income for Social Security purposes only if the landlord has an active role in the production or management of the crop or livestock. This is called “material participation.”

Both the “materially participating” landlord and the renter/tenant/share farmer must report their own earnings for Social Security purposes.

Crew Leaders And Farm Labor Contractors

If you are crew leader, you are either an employee of the farm owner/operator who hired you or an independent contractor. Your situation depends entirely on the arrangements you made with the farm owner/operator.

If you are an employee, the farmer must give you pay statements and W–2 forms and withhold tax money for Social Security and Medicare, just as he or she is required to do for all employees.

However, if you are an independent contractor, you are considered a self–employed person just like the farmer, and you are responsible for paying your own Social Security and Medicare taxes in the same way a self–employed farmer does.

Who Should Report Farm Income?

If you have less than $400 net profit, you still may be able to pay the taxes and thus earn the Social Security and Medicare protection by using the “farm optional method” of reporting.

NOTE: You may owe “self–employment tax” even if your earnings are so low that you don't owe any income tax.

Figuring Net Earnings

Any federal agricultural program payments you receive must be counted in figuring the amount of your earnings.

However, the following kinds of income should not be counted when figuring net earnings for Social Security purposes:

• income from the sale of equipment and livestock not held for sale (such as dairy, breeding, sporting and work animals);
• income from timber sold on the stump;
• income from land sales;
• rental income received by a landlord who does not actively participate in the operation of a farm;
• crop/livestock that a share farmer gives to or sells for the landlord.

How To Report Your Earnings

Farm Optional Method

If  you have low net earnings or a loss, you may wish to use the “farm optional method” for reporting your income.   Using this method, you can report more net profit than you actually had, so that you can pay the self–employment tax on this amount and acquire Social Security and Medicare protection. You may use this method in either one of the following situations:

• If your gross income is $2,400 or less, you have the option of reporting your real net profit or two–thirds of your gross income amount.
• If your gross income is more than $2,400, but your net income is less than $1,733, you have the option of reporting your real net profit or $1,600.

Estimated Taxes

Tax Forms And More Information

The forms are also available from IRS offices or at most banks and post offices.

In addition, you can also get all IRS forms and publications on the Internet at http://www.irs.gov/formspubs/index.html

If you have questions about income tax returns or taxes,  contact any IRS office or call 1–800–829–1040, toll free. The toll–free number for the hearing impaired is 1–800–829–4059.

Contacting Social Security

People who are deaf or hard of hearing may call our toll–free  “TTY” number, 1–800–325–0778, between 7 a.m. and 7 p.m. on business days.

The Social Security Administration treats all calls confidentially—whether they're made to our toll–free numbers or to one of our local offices. We also want to ensure that you receive accurate and courteous service. That is why we have a second Social Security representative monitor some incoming and outgoing telephone calls.

Sobre Este Folleto

Si usted es dueño u operador de una finca, hacienda, huerto u otra empresa agrícola, o si es un cultivador, contratista de trabajadores agrícolas o capataz, este folleto tiene información importante para usted. Está dividido en tres partes. La Parte 1 explica lo que está pagando con sus impuestos de Seguro Social y de Medicare. La Parte 2 explica cómo reportar los ingresos de sus empleados al Seguro Social y explica por qué es importante hacerlo. La Parte 3 explica cómo reportar sus propios ingresos al Seguro Social—bien sea usted el dueño/operador, socio, arrendatario, aparcero, contratista o capataz.

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Parte 1—Conjunto de Beneficios de Seguro Social

Se ha dicho que unas de las desventajas de tener un negocio por cuenta propia, es no poder tener el “conjunto de beneficios” disponible para muchos empleados, especialmente los que trabajan en organizaciones grandes.  La falta de esos beneficios se considera como cosa natural para la mayoría de los trabajadores agrícolas.  Pero tales ideas dejan de tomar en cuenta el valor de los beneficios disponibles para usted y sus empleados debido a que usted paga impuestos de Seguro Social y Medicare.

Cada vez que usted haga una declaración de impuestos y pague impuestos de Seguro Social y Medicare para usted mismo, o cada vez que reporte los salarios para un empleado enviando el formulario W–2 al Seguro Social y entregando una copia a su empleado, usted está contribuyendo a ese conjunto de beneficios. Generalmente, mientras más ingresos hay en el registro de una persona, más altos son sus beneficios de Seguro Social.  Así que, reportando los ingresos y salarios correctos hoy día, significa beneficios más altos en el futuro para usted y su familia, y para sus empleados y sus familias.

¿Cuáles son los beneficios que usted está pagando con sus impuestos de Seguro Social y Medicare?  Es mucho más que los beneficios de jubilación que la mayoría de las personas asocian con el Seguro Social.  Sus impuestos pagan por lo siguiente:

• Seguro de Jubilación—Beneficios pagados mensualmente a trabajadores retirados—tan temprano como a los 62.
• Seguro de Incapacidad—Beneficios pagados mensualmente a trabajadores de todas edades que estén severamente incapacitados.  En algunos casos, un trabajador joven puede calificar para beneficios de incapacidad con solamente un año y medio de trabajo.
• Seguro de Familia—Beneficios pagados mensualmente al cónyuge y a los hijos del trabajador jubilado o incapacitado.
• Seguro de Sobreviviente—Beneficios pagados mensualmente al cónyuge viudo, y a los hijos de un trabajador fallecido.  En algunos casos, la familia de un trabajador joven que muere puede recibir beneficios aunque el trabajador solamente haya trabajado por un año y medio.
• Seguro Médico—Ayuda con las cuentas del hospital, así como protección limitada de estancia en una institución de enfermería especializada, cuidado de hospicio, y otros servicios médicos.

Usted puede observar que reportar correctamente significa mucho más  que un asunto de impuesto, porque está relacionado directamente con la elegibilidad, y la cantidad del beneficio de Seguro Social pagadero a usted, sus empleados y sus familias.  Por eso nosotros siempre ponemos énfasis en la importancia de reportar el nombre, número de Seguro Social y salarios correctos, para usted y sus empleados. Asegúrese de usar el nombre y número de Seguro Social exactamente como aparecen en la tarjeta de Seguro Social.

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Parte 2—Reportando Ingresos de Trabajadores Agrícolas

La mayoría de trabajadores agrícolas están “cubiertos” por Seguro Social.  Esto quiere decir que se deben pagar impuestos de Seguro Social y Medicare sobre sus ganancias. Si usted emplea trabajadores “cubiertos”, debe mantener un registro de los salarios pagados, retener sus impuestos de Seguro Social y Medicare, informar sus salarios y pagar los impuestos correspondientes. Si no reporta los salarios ni paga los impuestos debidos, puede estar sujeto a una multa.  Si un trabajador agrícola se queja al Seguro Social de que los salarios no han sido informados, y tiene pruebas de esos salarios, la violación será informada al Servicio de Rentas Internas (IRS).

Trabajadores agrícolas bajo su dirección y control no pueden ser considerados contratistas independientes.  Ellos son empleados y sus salarios deben ser reportados al Seguro Social.

¿Cuáles Trabajadores Agrícolas Están “Cubiertos”?

• Usted le paga al trabajador $150 o más en salarios en efectivo durante el año calendario por trabajo de agricultura; o
• Usted le paga al trabajador menos de $150 en salarios efectivos, pero sus gastos totales por trabajos agrícolas son $2,500 o más en un año.

Sin embargo, si usted emplea braceros que viajan diariamente de sus casas al trabajo para recoger la cosecha de estación y les paga a base de tarea, y esos braceros trabajaron en trabajos agrícolas durante menos de 13 semanas en el año anterior, este trabajo está “cubierto” por Seguro Social solamente si le paga al empleado por lo menos $150 en efectivo por el trabajo.

¿Quién Es El “Patrono” De Los Trabajadores Agrícolas?

Muchos agricultores emplean o contratan un contratista/capataz para manejar sus trabajadores agrícolas.  Dependiendo de las circunstancias, el “patrono”, con la responsabilidad de someter los informes de salarios, puede ser el agricultor o el contratista/capataz.

Algunos agricultores contratan contratistas/capataces que son contratistas independientes para manejar todas las responsabilidades de reportar los salarios.  Sin embargo, si un acuerdo escrito declara que el contratista/ capataz es el empleado del agricultor, el agricultor es responsable de todos los informes de salarios y de mantener los registros.  Si no existe un acuerdo por escrito y:

• El contratista/capataz paga a los trabajadores (aunque sea en representación del agricultor) entonces el  contratista/capataz es el patrono; o
• El agricultor o el agente del agricultor paga a los trabajadores, entonces quienquiera que tenga el derecho final de controlar a los trabajadores en el trabajo es el patrono.

NOTA: Si usted es un patrono de trabajadores agrícolas, puede ser que deba registrarse con el Departamento de Trabajo de los EE.UU (en inglés: U.S. Department of Labor)  como un contratista de trabajo agrícola.  Para más información comuníquese con el Departamento de Trabajo, División de Salarios y Horarios (en inglés: Department of Labor's Wage and Hour Division) que se encuentra en la guía telefónica bajo “U.S. Government, Department of Labor, Employment Standards Administration”.

Cómo Preparar Un Acuerdo Escrito

• Nombre y dirección del agricultor y del contratista/capataz;
• Ubicación de la finca, clase de cosecha y operación, y fechas
  aproximadas de los trabajos;
• Declaración de que el contratista/capataz facilitará una cuadrilla para que haga el trabajo;
• Declaración de que el contratista/capataz y los trabajadores de la cuadrilla son empleados del agricultor quien reportará sus salarios y pagará los impuestos de Seguro Social y Medicare correspondientes; y
• Declaración sobre la cantidad cobrado por el contratista/capataz por servicios, los salarios que han de pagarse a los trabajadores y cualquier arreglo que existe sobre transportación, vivienda y seguros.

Responsabilidades Del Patrono

• Mantener un registro para cada trabajador—Indique el nombre del trabajador, número de Seguro Social (cópielo solamente de la tarjeta de Seguro Social), salarios pagados en efectivo, e impuestos que usted retiene.

Si el trabajador agrícola está sujeto a la Ley de Protección de Trabajadores Migratorios y Estacionales, el registro también debe indicar: a) la tasa de pago; b) horas totales de trabajo cada día y semana; c) la fecha en que los salarios fueron pagados; d) el período cubierto bajo el pago.

• Descontar y pagar impuestos de Seguro Social—Generalmente, los impuestos se deben pagar periódicamente durante el año, usando cupones de depósito del talonario 8109, Libro de Cupones de Depósito de Impuesto Federal (en inglés: Federal Tax Deposit Coupon Book), disponible en una oficina del Servicio de Rentas Internas.
• Preparar Formulario 943—Una vez al año usted debe completar el formulario 943 de IRS (Declaración Anual del Empleador sobre el Impuesto Anual de Empleados Agrícolas). Los residentes de Puerto Rico deben usar el Formulario 943PR.  Normalmente se debe mandar este formulario antes de enero 31 para salarios pagados en el año anterior. Usted tiene hasta febrero 10 si depositó todos los impuestos con sus cupones del año anterior.
• Proveer una declaración de pago y preparar Formulario W–2—La Ley de Protección a Trabajadores Migratorios y Estacionales requiere que usted le dé a sus empleados una declaración de pago.  Después que el año termine, prepare el Modelo W–2 (Comprobante de Retención) para cada empleado a quien le haya pagado cualquier cantidad de salarios.  (Los residentes de Puerto Rico deben preparar el modelo W–2PR.)  Incluya el valor en efectivo de cualquier pago que no fue en efectivo en el cuadrito “Sueldos, propinas, otra compensación” del W–2 (“sueldos” en la W–2PR), pero muestre sólo los salarios en efectivo en el cuadrito que dice “Sueldos de Seguro Social” y en el cuadrito que dice “Sueldos y propinas Medicare.”  Envíe la Copia A del W–2, junto con el W–3 (Transmisión de Declaraciones de Ingresos e Impuestos; en Puerto Rico, W–3PR), a la Administración de Seguro Social antes del último día del mes de febrero que sigue al año en que los salarios fueron pagados. La dirección para su área está en las instrucciones para el formulario W–3.  Dé copias del W–2 a los empleados antes de enero 31 después que el año en que ganaron los salarios.

Si el trabajador agrícola se muda frecuentemente, y tiene problemas para recibir la correspondencia, usted puede entregarle el W–2 cuando termine el trabajo en vez de esperar hasta enero 31 del próximo año.

Para más información, obtenga la Publicación 51 de IRS, Circular A (Agricultural Employer's Tax Guide; esta publicación no está disponible en español).  Usted puede llamar para ordenar los formularios y publicaciones de IRS al número gratis 1–800–Tax–Forms (1–800–829–3676).

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