IRS Requires Employers of H-2A Workers to File W-2's
Beginning in 2011, employers of foreign agricultural workers temporarily in the United States on H-2A visas are required to file Form W-2, Wage and Tax Statements on compensation of $600 or more. Payments made to H-2A workers are exempt from Social Security and Medicare taxes. Further, employers are not required to withhold federal or Kentucky income tax. Employers are encouraged to check with the local taxing authorities on their withholding requirements.
The total compensation paid to an H-2A worker for the calendar year will be reflected in Box 1 (Wages, tips and other compensation) and Box 16 (State wages, tips, etc.) of the W-2. No amounts will be reported in Box 3 (Social Security wages) or Box 5 (Medicare wages.) Again, if employers have questions, they should check with local taxing authorities on their reporting requirements.
On the Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, the payments to H-2A employees will not be reported on line 2 (wages subject to Social Security tax) or line 4 (wages subject to Medicare tax).
In order to be able to file a Form W-2, the employer needs a tax identification number (TIN) for the employee. H-2A workers here on an I94 visa are eligible to receive a TIN from their local Social Security Administration Office. The H-2A worker will need to fill out an application (available in Spanish) and present their original passport and I94 visa. The TIN assigned will stay with them for their lifetime; they will only need to file once.
If the employer does not get a TIN, payments made to the worker will be subject to backup withholding at a rate of 28%. If this occurs, the compensation will be reported on a 1099-MISC rather than Form W-2. Employers who do not issue Form W-2 and fail to do the backup withholding will be held liable for the amount that should have been withheld. So, it is crucial that employers have a good understanding of withholding requirements.
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