The tests described below apply only to services that are defined as agricultural labor (farmwork). Farmworkers are your employees if they:

• Raise or harvest agricultural or horticultural products on your farm.
• Work in connection with the operation, management, conservation, improvement, or maintenance of your farm and its tools and equipment.
• Handle, process, or package any agricultural or horticultural commodity if you produced over half of the commodity (for a group of more than 20 operators, all of the commodity).
• Do work for you related to cotton ginning, turpentine, or gum resin products.
• Do housework in your private home if it is on a farm that is operated for profit.

A share farmer working for you is not your employee. However, the share farmer may be subject to self-employment tax. In general, share farming is an arrangement in which certain commodity products are shared between the farmer and the owner (or tenant) of the land. For details, see Regulations section 31.3121(b)(16)-1.

The $150 Test or the $2,500 Test

All cash wages you pay for farmwork are subject to social security and Medicare taxes if either of the two tests below is met:

• You pay cash wages to the employee of $150 or more in a year for farmwork (count all cash wages paid on a time, piecework, or other basis) for farmwork. The $150 test applies separately to each farmworker you employ. If you employ a family of workers, each member is treated separately. Do not count wages paid by other employers.
• The total you pay for farmwork (cash and noncash) to all of your employees is $2,500 or more.

Exceptions. The $150 and $2,500 tests do not apply to the following:

1. Wages you pay to a farmworker who receives less than $150 in annual cash wages are not subject to social security or Medicare taxes even if you pay $2,500 or more in that year to all your farmworkers if the farmworker:
   1. Is employed in agriculture as a hand-harvest laborer,
   2. Is paid piece rates in an operation that is usually paid on a piece-rate basis in the region of employment,
   3. Commutes daily from his or her home to the farm, and
   4. Was employed in agriculture less than 13 weeks in the preceding calendar year.

   Amounts you pay to these seasonal farmworkers, however, count toward the $2,500-or-more test to determine whether wages you pay to other farmworkers are subject to social security and Medicare taxes.

2. Cash wages you pay a household employee are counted in the $2,500 test but are not subject to social security and Medicare taxes unless you have paid the worker $1,200 or more in cash wages in 2000 ($1,300 in 2001). See the table on page 17 showing liability for social security, Medicare, and FUTA taxes.

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