Amish exempt and employees

[JenMO]

My client is exempt (4029). He is hiring employees as W-2 wages, some are also exempt and others aren't. Is my understanding correct? He doesn't have to w/h FICA or pay his half on the exempt employees, but he has to w/h and pay his half on the non exempt. How is this reported on the 941. Any help here and publication references would be appreciated.
Thanks

[Jay Lode, CPA]

My client is exempt (4029). He is hiring employees as W-2 wages, some are also exempt and others aren't. Is my understanding correct? He doesn't have to w/h FICA or pay his half on the exempt employees, but he has to w/h and pay his half on the non exempt. How is this reported on the 941. Any help here and publication references would be appreciated.
Thanks

JenMO- First, make sure you get copies of the documentation substantiating the claims of exemption to make sure the exemptions are valid to help you and client avoid penalties in the event they are not factually correct.

Given that, pub 517 describes your situation pretty well, see page 2 & 3.

Based on what you have indicated in your post, the employer having an exemption under 4029 would NOT withold the employer's portion of FICA from any wages paid; Employer would not withhold FICA on employees who have valid exemption, BUT would withhold FICA on employees who do not have valid exemption.

So...941 line 2 would show all wages paid to all employees, Boxes 5a and 5c would only show wages subject to FICA withholding for those employees who are not exempt.

Read pub 517 very closely. Hope this helps.
Jay

[Jiggers]

Disagree

I think you are wrong about the Amish and SS.

They can elect not to be covered under SS for Self-Employment Tax only.

They cannot elect not to be covered under SS for employee/W-2 purposes.

If they are being paid as an employee/W-2, then they have to have SS/Med withheld. Read the election form that they have to fill out. It is for Self-Employment Tax only.

Just attended a seminar and this was brought up.

Plus, I had a client several years ago with the same situation. I read the IRS regs and did some other research and this is correct.

[HBurkholder]

Disagree

That was the case in the past, however, I believe W2 employees were incuded several years ago.