A2B-UncMttf Fanning, Saturday, July 8,1989
I
F
A
R
MANAGEMENT
BY JOHN J. DEFASSIO
Multi-county Farm
Management Agent
Penn State Cooperative
Extension
Penn State Farm Management
Agents arc taking an in-depth look
at Labor Management, dividing
the subject into eleven articles.
This is the second installment of
the series.
There are only two types of tax
laws that apply to agricultural
labor: Employment taxes and
Unemployment taxes. That sound
s simple enough until you realize
that federal, state and local taxing
agencies all enforce laws under
these two categories.
Federal Employment
Taxes (FICA)
Social Security lax is author
ised through the Federal Insurance
Contribution Act (FICA). The tax
applies to farmers employing
more than $2500 of agricultural
labor from all employees during
one calendar year, OR who pay
$l5O or more in cash wages to an
individual employee during a
calendar year.
What is Taxable
The tax rate is applied to the
-wage base, the first $48,000 of
cash wages paid in 1989. The
wage base will be adjusted auto
matically as the average wage
level changes. All base wages paid
to employees arc subject to the
lax, including wages paid to the
employer’s spouse. Children of
the employer who arc under age
18 arc exempt from Social Securi
ty or FICA tax. Employer’s
BVi HP Kawasaki Gasoline Engine
With Clutch & 6 to 1 Reduction
Specially designed shaft to power hydraulic pumps, etc.
This unit is basically designed to transmit power from engine to power take off shaft
equipment The reason for this design, an extra shaft is built into this unit so power can
be transmitted to the hydraulic system by using belts and pulleys. This shaft is placed
above the splmed shaft, and runs hydraulic pump with or without power take off shaft in
gear No need to take the rope rewind starter off to mount pulley on front of the engine.
This simple design eliminates special machined pulley adaptors. Reduction housing and
cover is a rugged cast iron construction. All shafts are of special selected steels and are
heat treated and hardened at wear points. All ball and needle bearing construction for
long life A heavy-duty ball-loc type clutch Is used This unit has few moving parts, thus
it should give many years of service. Clutch adjustments are made from the outside, (very
simple)
A specially selected engine, the Kawasaki KF-82 BVi HP, is used for your convenience.
The engine is also made with rugged construction, and has smooth operation. This engine
has high torque at low RPMs, thus is well adapted to the clutch and reduction unit. »
Salas and Service
For More Information Write:
BEILER ENGINE REPAIR SHOP
Beiler Mfjg.
1622 Georgetown Rd., Christiana, PA 17509
, 4* t
Located IV4 ml. South of Nine Points Along Rt,
spouse and under age 21 child
rens’ wages became subject to this
lax in 1988 and later years.
How FICA Tax
is Collected
The lax rale for 1989 is 7.51
percent and for 1990 the rate will
be 7.63 percent. This rate applies
to the gross cash wages paid. The
tax is imposed upon both the
employer and the employee. The
employer is responsible for col
lecting the employee’s share of
the tax and remitting a total tax of
15.02 percent to the IRS. The tax'
is required to be deposited at any
authorized financial institution
within IS days when the total lia
bility at the end of any month *
reaches $5OO. If the monthly lia
bility equals $3OOO or more the
total tax must be deposited within
three banking days of the end of
any eight-monthly period for
which the accumulated liability
exceeds $3OOO. The eight
monthly periods end on the 3rd,
7lh, llth, 15lh, 19lh, 22nd, 25th
and the last day of each month.
What Form to File
Agricultural employers are
required to file form 943 annually
to report the total liability for fed
eral employment taxes. The form
must be filed with the IRS not
later than January 31 of the fol
lowing year. Total taxable wages
arc reported, tax liability is calcu
lated and total tax deposits are
accounted for. Any undeposited
liability is due with the return.
Separate penalties are imposed for
failure to deposit taxes on time
and failure to file a tax form on
time. In addition to FICA tax,
form 943 is also used to report any
federal income lax withheld. Far
mers are not required to withhold
federal income tax from an agri
cultural employee. However, both
the employee and employer may
agree to withhold income taxes
from wages paid.
More Forms
Farmers must also complete a
form W-2 for each employee. The
W-2 reports the total compensa
tion and the taxable FICA wages
paid. The employer must also
report any and all taxes withheld
from wages on form W-2. Form
W-2 must be distributed to the
employees by January 31 of the
following year. Form W-3 is
required for the employer to trans
mit all W-2 forms to the Social
Security Administration by Febru
ary 28 of the following year.
State Employment
Taxes
Pennsylvania imposes an
income tax on wages earned in the
state. The tax must be collected by
the employer if the employee is
subject to federal withholding.
The tax withheld, if less than
$3OO, is deposited each quarter
± If You Want To Pay ~
mkCash - We’ll Pay You
$ $ For That! V
Wisconsin
Briggs
Stratton
Kawasaki
Engines
896
These Can Be Yours At
C.E. WILEY Si SON INC.
"4' - *
■ Waiver Of Finance On Hay & Forage Equipment
Till March 1, 1990
L] ■ Waiver Of Finance On Skid Steer Loaders,
J Grinder Mixers & Spreaders Till Jan. 1,1990
S \ LOW RATE FINANCING:
f 0% -18 Mos. - Hay & Forage Equipment
0% -12 Mos. - Spreaders & Grinder Mixers
6.9% - 24 Months 9.9% - 48 Months
8.9% - 36 Months 10.9% - 60 Months
nun
with the State of PA by using f6nn
PASOI. If the tax withheld is $3OO
(V more it is deposited monthly
and a quarterly reconciliation
form is required. In addition an
annual form PAW-3R must, be
Hied along with a copy of each
employees form W-2. The
PAW3-R acts as a reconciliation
formrand a transmittal form for the
individual W-2 reports.
Local Employment
Taxes
Some local governments have
'established an Occupational Pri
vilege Tax, This is flat
rate of $lO for each employee who
earns $lOOO or more during the
year. Many local governments
also impose an earned income tax
on wages earned within their juris
diction. Employers are usually
required to withhold these taxes
and remit the tax to the local tax
collector on a quarterly basis.
Each local government establishes
its own rules for withholding and
remitting these taxes. Please
check with your local Earned
Income Tax Collector for more
information.
OR
Federal Unemployment
, Taxes (FUTA)
The Federal Unemployment
Tax Act (FUTA) requires farmers
to pay FUTA only when cash
wages of $20,000 or more are paid
in any calendar quarter OR if 10 or
more workers are employed for
some portion of a day during each
of 20 different calendar weeks
during the current or preceding
year. Wages paid to the employ
er’s spouse, parents, or the
employer’s OWN children under
age 21 are NOT subject to FUTA
tax. FUTA is a tax on the employ
er and CANNOT be deducted
from the employee’s wage.
How FUTA Tax
is Collected
A tax rate of 6.2 percent is
charged on the first $7OOO of cash
wages paid. If an employer has
filed and paid all state unemploy
ment taxes in a timely manner a
credit of 5.4 percent of the taxable
wages is granted. This credit
yields a net rate of .8 percent. A
deposit must be made of the total
tax liability at any authorized
financial institution by the end of
(Turn to Pago A 29)
• GRINDER MIXERS
• BALERS
f;