Page 41 - IRS Employer Tax Guide

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Special Classes of Employment and Treatment Under Employment Taxes
Special Types of Payments
Social Security and
Income Tax Withholding Medicare (including FUTA
Additional Medicare Tax
when wages are paid in
excess of $200,000)
Foreign service by U.S. citizens:
1. As U.S. government employees. Withhold Same as within U.S. Exempt
2. For foreign affiliates of American Exempt if at time of payment Exempt unless (1) an Exempt unless (1) on
employers and other private employers. (1) it is reasonable to believe American employer by American vessel or aircraft
employee is entitled to agreement covers U.S. and work is performed
exclusion from income under citizens employed by its under contract made in U.S.
section 911, or (2) the foreign affiliates, or (2) U.S. or worker is employed on
employer is required by law citizen works for American vessel when it touches U.S.
of the foreign country to employer. port, or (2) U.S. citizen
withhold income tax on such works for American
payment. employer (except in a
contiguous country with
which the U.S. has an
agreement for
unemployment
compensation) or in the U.S.
Virgin Islands.
Fringe benefits. Taxable on excess of fair market value of the benefit over the sum of an amount paid for it
by the employee and any amount excludable by law. However, special valuation rules may
apply. Benefits provided under cafeteria plans may qualify for exclusion from wages for
social security, Medicare, and FUTA taxes. See Pub. 15-B for details.
Government employment:
State/local governments and political
subdivisions, employees of:
1. Salaries and wages (includes payments Withhold Generally, taxable for (1) Exempt
to most elected and appointed officials). services performed by
See chapter 3 of Pub. 963. employees who are either
(a) covered under a
section 218 agreement, or
(b) not covered under a
section 218 agreement
and not a member of a
public retirement system
(mandatory social security
and Medicare coverage);
and (2) (for Medicare tax
only) for services
performed by employees
hired or rehired after March
31, 1986, who aren't
covered under a section
218 agreement or the
mandatory social security
provisions, unless
specifically excluded by
law. See Pub. 963.
2. Election workers. Election individuals Exempt Taxable if paid $1,900 or Exempt
are workers who are employed to more in 2020 (lesser
perform services for state or local amount if specified by a
governments at election booths in section 218 social security
connection with national, state, or local agreement). See Revenue
elections. Ruling 2000-6.
Note. File Form W-2 for payments of
$600 or more even if no social security
or Medicare taxes were withheld.
3. Emergency workers. Emergency Withhold Exempt if serving on a Exempt
workers who were hired on a temporary temporary basis in case of
basis in response to a specific fire, storm, snow,
unforeseen emergency and aren't earthquake, flood, or
intended to become permanent similar emergency.
employees.
U.S. federal government employees. Withhold Taxable for Medicare. Exempt
Taxable for social security
unless hired before 1984.
See section 3121(b)(5).

Page 40 Publication 15 (2020)