What Federal Payroll Taxes Apply When I Hire Farmworkers?

Hiring help at harvest or year-round is common on farms around Los Banos, and it brings federal payroll duties that differ from those of other employers. The IRS used to publish a separate Agricultural Employer’s Tax Guide, Publication 51. It has been discontinued, and farm employers now use Publication 15, the general employer’s guide, which includes the agricultural rules. This answer summarizes them from the 2026 edition. California has its own employment taxes and payroll rules, which your CPA or payroll provider will handle alongside these.

Who counts as a farm employer?

In general you are an employer of farmworkers if your employees do farmwork such as raising or harvesting agricultural or horticultural products on a farm. A crew leader who furnishes and pays workers for a farm operator is also treated as their employer if there is no written agreement making the crew leader the operator’s employee. If a crew leader supplies workers to you, the IRS says you must keep a record of the crew leader’s name, permanent mailing address and employer identification number.

When are wages taxable? The two tests

All cash wages you pay an employee for farmwork during the year are subject to social security and Medicare taxes and federal income tax withholding if either test is met:

• the $150 test: you pay the employee $150 or more in cash wages for farmwork in the year, counted separately for each worker;
• the $2,500 test: the total you pay for farmwork, cash and noncash, to all employees is $2,500 or more in the year.

There is one exception. Annual cash wages under $150 paid to a seasonal farmworker are not subject to these taxes even if you pass the $2,500 test, though they still count toward that test. The IRS defines a seasonal farmworker as someone employed as a hand-harvest laborer, paid piece rates in an operation usually paid that way in the region, who commutes daily from home and worked in agriculture fewer than 13 weeks in the prior year.

What about noncash wages?

Noncash wages such as food, lodging or farm products, including commodity wages, are generally not subject to social security, Medicare or income tax withholding. The IRS adds that if a noncash payment is in substance a cash payment, it is treated as cash.

Which return do I file?

Agricultural employers file Form 943, an annual return for agricultural employees, instead of the quarterly Form 941 most employers use. It is filed for the previous calendar year in early the following year, with an extra ten days if all deposits were made on time. Taxes are generally deposited during the year according to your deposit schedule; small annual liabilities under $2,500 may be paid with the return.

Does federal unemployment tax apply?

Federal unemployment tax, or FUTA, is paid by the employer only. Farm employers are subject to it if either of these is true:

FUTA farmworker test	Detail
Wage test	$20,000 or more in cash wages to farmworkers in any calendar quarter of this year or last
Headcount test	10 or more farmworkers on at least part of a day in 20 or more different weeks of this year or last

Wages paid to H-2A visa workers count toward those tests but are not themselves subject to FUTA. Workers supplied by a crew leader are generally treated as the farm operator’s employees for FUTA unless the crew leader is registered under the Migrant and Seasonal Agricultural Worker Protection Act or substantially all the workers operate machines the crew leader provides.

What records should I keep?

• each worker’s name, address, social security number and dates worked;
• cash wages and any noncash pay for each payment;
• crew leader details if you use one;
• copies of Form 943, deposits and wage statements.

The IRS asks employers to keep employment tax records for at least four years after the tax is due or paid, whichever is later. More on retention is in How Long Should I Keep Tax and Business Records?.

Family members on the farm

The IRS has a special rule for children. Wages paid to a child under 18 working on a farm that is a sole proprietorship, or a partnership in which each partner is a parent of the child, are not subject to social security and Medicare taxes. Those wages still count toward the $2,500 test for other workers. Ask your CPA how the rule applies to your family before you set up pay.

Why a CPA helps here

The tests, the crew leader rules and the deposit schedule interact, and California adds its own payroll requirements. If you employ farmworkers, ask any CPA you interview whether they handle agricultural payroll or work with a payroll service that does, one of the questions suggested in How Do I Choose a CPA in Los Banos?.