If you're an agricultural employer who pays farmworkers, you may have wages that qualify as exempt for FUTA and SUTA taxation. If this is the case, we'll calculate and defer these taxes according to federal and state guidelines, so you never have to worry about surprise fees from tax offices down the road.
IMPORTANT: Always check your state's unemployment tax requirements
Exemption from SUTA taxes is always at the discretion of the state, and is subject to state laws and regulations. Not every state allows UI tax exemptions for farmworkers. Always refer to the labor laws of every state where you pay employees.
What we'll cover
- How to defer FUTA and SUTA taxes for farmworker wages
- Do I need to turn on "Company-Wide Exemptions" in Company Preferences?
- What's the difference between tax-exempt and tax-deferred?
- How do I know if wages are exempt from FUTA and SUTA?
- Why are H-2A visa workers included in these wages and hours?
- Federal and State resources on this topic
How to defer FUTA and SUTA taxes for farmworker wages
Contact support to have FUTA and SUTA tax contributions calculated and deferred. Here's how you can reach us:
- Submit a ticket under the help topic "Tax"→
- Email us at hello@onpay.com→
- Call us at 877-328-6505
Do I need to turn on "Company-Wide Exemptions" in Company Preferences?
No. Do not indicate that you are exempt from FUTA or SUTA under "Company-Wide Exemptions" in Company Preferences. Because there are certain limitations on this tax exemption, it's important that we instead calculate and defer FUTA and SUTA taxes for wages paid to farmworkers. This ensures that these calculations are available in the event that your cash wages exceed the limit for this deferment.
What's the difference between tax-exempt and tax-deferred?
While some companies paying farmworkers may qualify as exempt from FUTA and SUTA taxation, it's important to remember that this exemption has limitations. Rather than a tax exemption, this may more accurately be described as a deferral of tax obligation, pending continued qualification.
Federal and state unemployment tax contributions are no longer deferred if you've:
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Paid wages (including cash) totalling $20,000 or more to your farmworkers (including H-2A visa workers) within any quarter of the current or previous calendar year; or
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Employed 10 or more farmworkers (including H-2A visa workers) within a 24-hour day (even if not concurrently), and did so during any 20 or more different weeks (consecutive or non-consecutive), within the current or previous calendar year
Because it's not always possible to know whether these conditions will be met until they are, you may be paying wages now that will no longer qualify as "FUTA exempt" by the end of the year. This can lead to unpaid pax contributions, and even fines from federal or state unemployment offices.
Even if you qualify as "FUTA exempt", it's important to continue calculating and accounting for these potential tax amounts with each pay run, so that, in the event that any paid wages don't qualify for this exemption, we've got you covered.
How do I know if wages are exempt from FUTA and SUTA?
The Federal Unemployment Tax Act (FUTA), along with state unemployment systems, provides for payments of unemployment compensation to workers, including agricultural and farm workers, who have lost their jobs. Employers report their paid wages and pay their unemployment tax contributions using Form 940. This includes agricultural employers paying cash wages to farmworkers, though some exemptions apply.
You must file Form 940 if you:
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Paid wages (including cash) totalling $20,000 or more to your farmworkers (including H-2A visa workers) within any quarter of the current or previous calendar year; or
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Employed 10 or more farmworkers (including H-2A visa workers) within a 24-hour day (even if not concurrently), and did so during any 20 or more different weeks (consecutive or non-consecutive), within the current or previous calendar year
Why are H-2A visa workers included in these wages and hours?
H-2A visa workers are non-citizen workers who are temporarily admitted by the United States to perform farmwork. Wages paid to these workers are not subject to FUTA or SUTA taxation, however, both the $20,000/quarter and the 10 worker per day thresholds include the wages and hours of H-2A visa workers.
Federal and State resources on this topic
IRS - Agricultural Employer's Tax Guide→
State UI Tax Information and Assistance→
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