Farms and ranches have different requirements come tax time (and all year round), so we’ve developed some helpful instructions to make sure you get your IRS Form 943 right.
Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees, is used to report federal income tax, Social Security and Medicare Tax, as well as any Additional Medicare Tax withheld and paid for the year. It’s designed to be used in place — or in addition to Form 941 — for businesses that routinely pay farm workers.
Form 943 is only used by companies that employ and pay farmworkers wages by cash, checks, or money orders. Non-cash wages are food and lodging, or payment for services other than farm work.
There are two tests to determine whether a Form 943 needs to be filed:
Even if you do not meet the $2,500 test, the $150 test for each employee still holds. Likewise, if you do not pay any individual more than $150 in cash, but your cumulative total for the year is at least $2,500, you will still need to file Form 943.
Form 941 is the annual return filed by most businesses with nonfarm workers. Please keep in mind that you may need to file both forms if you employ both farm and nonfarm workers (and meet the wage-based test described above).
To complete Form 943, you’ll want to have the following information handy:
Form 943 must be filed annually by January 31. However, if taxes have been deposited throughout the tax year, farms and ranches have an additional 10 days to file. It’s important to note that Form 943 must be reconciled with totals filed on Form W-2 and W-3.
Once you file your first Form 943, you must continue to every year, unless your business closes. If your business closes, you will need to file a final return.
All taxes must be deposited when they are due, and business owners will be notified at the beginning of the year, whether they are monthly or semiweekly depositors. If you have tax liability less than $2,500 for the entire calendar year, you can pay the tax owed when you file Form 943.
If you use payroll software or a payroll service, Form 943 should be completed for you.
But please speak to your payroll provider to ensure Form 943 is being filed. As the business owner, you are ultimately responsible for the accurate and timely filing of the form as well as on-time payment of all taxes owed by the due date specified by the IRS. And you may want to choose payroll software specialized for agribusinesses.
According to the Fair Labor Standards Act, an agricultural employee is someone who engages in farming or ranching, or whose job is performed in conjunction with farming operations. If you’re unsure whether an employee should be classified as a farmworker, please ask your tax professional for guidance.
Read on for a line-by-line explanation of all the details and calculations that are included in Form 943.
Next, you can designate a third-party representative to discuss the return with the IRS. You’ll then sign the form and file it with the IRS. They recommend electronic filing, though paper returns are accepted as well.
And that’s it! If you use payroll software or services, this should all be done automatically. If you’re processing the form manually, the information you need should be easily accessible from your payroll journal. For additional more detailed instructions for Form 943, please visit IRS.gov.