While it may come as a shock to non-agricultural employers, an industry-wide secret is finally seeing daylight: Most farm work is paid “under the table,” or without withheld state and federal payroll taxes. However, this practice will not remain sustainable for much longer. The looming IRS crack-down on household workers will inevitably spill into the farm, and agricultural employers will need to step up their collective game to match the federal government’s payroll tax requirements. Now is the best time to become acquainted with the necessary agricultural worker taxes. Investing in a solution will save you headaches and back payments in just a few years.
Paying Your Agricultural Employer Taxes
So, what does an agricultural worker’s payroll tax look like? Let’s start by defining an agricultural employee. According to the U.S. Department of Labor, Agriculture includes farming in all its branches when performed by a farmer or on a farm as an incident to or in conjunction with such farming operations. Put simply, if you work on a farm completing farm-related tasks, you’re an agricultural worker.
Agricultural labor taxation differs slightly from other types of employee taxation. In addition to the agricultural employee distinction, cash wages paid to agricultural employees are subject to FICA taxes. Commodity wages are not cash wages and are thus not subject to FICA withholding. Additionally, wages paid to family members as employees are subject to Social Security, Medicare, and income tax withholding, but certain exceptions may apply for children, spouses, and parents in some states.
In general, farm worker taxes look very similar to other types of employee wages. The trouble for most farmers is getting their accounting processes up to speed and able to accommodate several workers at once. This is where AMS can help.
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Making the Leap to Payroll Software
Some employers reading this already pay their agricultural worker taxes. Some might have just made the decision to buckle down and start paying their taxes correctly. Wherever you fall on the agricultural farm employer spectrum, we have a tool to make the process simpler: Farm payroll software. Our dynamic software module, AMS Payroll ($134), is an excellent solution to start or simplify your employee tax process. Our 1099 Software can make life much easier if you have multiple contractors working for you.
This payroll software is an excellent tool for small farms and other businesses with agricultural workers. Whether you have a handful employees or several hundred workers, AMS Payroll will perform the necessary calculations, print relevant checks, and record essential payroll data to aid in quarterly and end-of-year filing. Plus, with up to 40 user-defined fields, employers can allocate for additions and deductions right in the software.
As a farm payroll provider, AMS keeps up with the latest systems and software features for farm production, supply costs, and other operational factors. Additionally, we know that farm metrics are often lumped into a single software solution, but we have varied strategies to address everything from wheat production to cattle management.
A farm manager software is only as effective as it is customizable, and that’s exactly the service you’ll receive from AMS. In addition to offering several farm management strategies, our software operates on a modular system, allowing users to select the products and services they need to craft their perfect product.