← FarmCPA Home

Don’t Forget The Double Payroll Tax Hit!

By: | Trackback URL | No Comments

January 10th, 2013

Many farmers are aware that the FICA rate for employees (including their employee portion, if self-employed) has gone back to the old 6.2% which is up 2% from the temporary reduced 4.2% rate for 2011 and 2012.  This increase applies on wages as paid and will also apply on any self-employment income paid with the tax return.

The other tax that may get lost in the discussion is the new Medicare surtax of .9% on earned income in excess of $200,000 for single taxpayers and $250,000 if married filing joint.  If the farmer is employed outside of the farm or earns a wage from their corporation, the employer will be required to start withholding this extra tax once the $200,000 level is reached, even if the employee is married.  If the spouse does not work, then the couple may be entitled to a refund when they file their personal tax return if their total wages are less than $250,000.

If the farmer is self-employed, then this extra tax will be owed if they exceed the threshold amount.

This is another tax that has a marriage “penalty” built into it.  For example, two single taxpayers earning $200,000 each would owe no additional Medicare tax, but if they were married, they would owe the tax on $150,000 of earnings or $1,350.

Paul Neiffer, CPA

 

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

More Posts - Website

Follow Me:
Twitter

← FarmCPA Home

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Subscribe to this blog by:

Previous Posts

Events

View upcoming speaking engagements and other networking events for Paul Neiffer and CliftonLarsonAllen’s agribusiness team.

See All

  • Twitter Feed

    Just saw a bighorn sheep eating grass in the bank next to the freeway. Less than 30' from my car. 5 days ago

    After 82 days in a rental car my wife has talked me into a cruise. We leave Thursday for Miami. Can't wait 6 days ago

    Will final ear weights set a new record. If so final corn yield will be going higher (unless we get an early hard freeze) 1 week ago

    Getting Train the Trainer info on the new Dairy Margin Protection program today in Denver. Learning a lot so far 1 week ago

    Has the chatter on an early freeze disappeared or is it just dormant 2 weeks ago

    Ag Economy; Policy Issues; and, Political Notes: farmpolicy.com/2014/09/05/ag-… 2 weeks ago

    Nothing prettier in August than to see rain water on the ground. At least the crops like it 3 weeks ago

    If tenants have compensated landlords fully for cash rents over the last few years, it will be much easier to get them to accept lower rents 4 weeks ago

    Is this Russia / Ukraine a case of buy the rumor / sell the news 4 weeks ago

    Nice rain and warmer temps yesterday should make good growing conditions 4 weeks ago