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Exemption from Withholding of U.S. Federal Income Tax and U.S. FICA Taxes

Foreign agricultural workers temporarily admitted into the United States on H-2A visas are exempt from U.S. Social Security and Medicare taxes on compensation paid to them for services performed in connection with the H-2A visa. This is true whether they are resident aliens or nonresident aliens. In addition, compensation paid to H-2A agricultural workers for services performed in connection with the H-2A visa is not considered to be "wages" for purposes of federal income tax withholding, and thus is not subject to mandatory withholding of U.S. federal income tax unless Backup Withholding applies 

Information Reporting

Beginning in calendar year 2011, an employer must report compensation of $600 or more paid to an H-2A agricultural worker on Form W-2, Wage and Tax Statement, and NOT on Form 1099-MISC, Miscellaneous Income, as required in previous years. The employer will report the compensation in box 1 (Wages, tips and other compensation) of Form W-2. No amount should be reported in box 3 (Social Security wages) or box 5 (Medicare wages) of Form W-2. No amount should be reported on line 2 (wages subject to Social Security tax) or line 4 (wages subject to Medicare tax) on Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees.  On Form W-2:  Do NOT check box 13 (“Statutory Employee”) as H-2A agricultural workers are not “Statutory Employees” as defined by the Internal Revenue Code.

An employer who has already reported compensation paid to H-2A agricultural workers on Form 1099-MISC for 2011 is NOT required to submit voided Forms 1099-MISC for this compensation and is NOT required to report this compensation on Form W-2 for 2011.