Employers in Puerto Rico are subject to the taxes imposed by the Federal Insurance Contributions Act (FICA) (Social Security and Medicare taxes) and the Federal Unemployment Tax Act (FUTA). An employer is a person or organization for whom a worker performs services as an employee. As an employer, you're required to withhold, report, and pay employment taxes to the United States on wages paid. To file the various employment tax returns, you need an employer identification number (EIN). If you don't have an EIN, you may apply for one online. You may also use Form SS-4 or Form SS-4 (sp) (in Spanish) to apply for an EIN by fax or mail (use only one method for each entity so you don't receive more than one EIN for an entity). For more information about EINs, see Topic no. 755. Social Security and Medicare FICA taxes are used to finance the Social Security and Medicare systems. FICA taxes consist of two components: Social Security tax and the Medicare tax. You must withhold the employee portion of FICA taxes from your employees' wages and contribute the employer portion of FICA tax. The current tax rate for Social Security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current tax rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Additional Medicare tax Additional Medicare tax applies to an individual's Medicare wages that exceed a threshold amount based on the taxpayer's filing status. Employers are responsible for withholding the 0.9% Additional Medicare tax on an individual's wages paid in excess of $200,000 in a calendar year, without regard to filing status. An employer is required to begin withholding Additional Medicare tax in the pay period in which it pays wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. There's no employer match for Additional Medicare tax. For more information, see the Instructions for Form 8959 and Questions and answers for the Additional Medicare Tax. Federal employment tax forms The forms used by employers in Puerto Rico to report the FICA taxes are the English (or Spanish) versions of: Form 941, Form 943, Form 944, and Schedule H (Form 1040) (for household employers). In addition, the forms used by employers in Puerto Rico to make corrections to employment taxes are: Form 941-X, Form 943-X, Form 944-X, and a corrected Schedule H. Household employers may need to file Form 1040-X also. Form 941 – If you're not an agricultural employer or an employer with only household employees, and all your employees are bona fide residents of Puerto Rico, file Form 941 to report all wages paid, tips your employees reported to you, other compensation, and FICA taxes. You must file Form 941 to report your employment taxes unless the IRS has notified you that you're required to file Form 944. Form 941 is filed quarterly and is due the last day of the month following the end of the quarter. For example, for wages you paid from January through March (the first quarter of the year), Form 941 is due April 30. If the due date for filing a return falls on a Saturday, Sunday or legal holiday, you may file the return on the next business day. The term legal holiday means any legal holiday in the District of Columbia. For a list of legal holidays, see Publication 15 (Circular E), Employer's Tax Guide. Form 943 – If you're an agricultural employer in Puerto Rico, you must file Form 943 to report the employer's and the employee's share of the FICA taxes for agricultural employees. To see if you're required to withhold and pay FICA taxes on your agricultural employees, refer to Publication 15. Form 943 is filed annually and is due by January 31 after the end of the calendar year. If the due date for filing a return falls on a Saturday, Sunday or legal holiday, you may file the return on the next business day. Most employers are required to deposit both the employer and employee portions of FICA taxes instead of paying them with the Form 943. Form 944 – If you're not an agricultural employer or an employer with only household employees, you may have been notified to file Form 944. Form 944 is filed annually by certain small businesses and is due by January 31 after the end of the calendar year. If the due date for filing a return falls on a Saturday, Sunday or legal holiday, you may file the return on the next business day. Employers aren't permitted to file Form 944 unless they requested this on their Form SS-4 or were notified by the IRS that they qualify to file Form 944. For employers who may be eligible to file Form 944 because their estimated annual employment tax liability is $1,000 or less, or for employers required to file Form 944 who want to file Form 941 instead, see the Instructions for Form 944 PDF. Employers notified to file Form 944, whose businesses grow during the year and exceed the $1,000 eligibility threshold, must still file Form 944 for the year. Employers who exceed the eligibility threshold will be notified by the IRS that their filing requirement has been changed to Form 941 beginning in a particular year. Schedule H (Form 1040) – If you pay a household employee cash wages, you may be required to withhold and pay FICA taxes on all wages you pay to that employee. To see if you're required to withhold and pay these taxes, see Publication 926, Household Employer's Tax Guide. File Schedule H (Form 1040) PDF to report and pay FICA taxes corresponding to the employer and the employee for all household employees. Household employees include housekeepers, maids, babysitters, gardeners and others who work in or around your residence as your employee. Repairmen, plumbers, contractors, and other businesspeople who are self-employed and own their equipment and control how the work is performed, normally aren't considered household employees. Tax deposits – Most employers (excluding household employers) are required to deposit their FICA taxes instead of paying them with the employment tax return. If you're filing Form 944, you may be able to pay your FICA taxes with your return. If you have deposited all of your tax on time, for Forms 943 and 944 you may file by February 10 (or the next business day, if applicable) and for Form 941, you may file by the 10th day of the second month following the end of the quarter (or the next business day, if applicable). See Publication 15 for filing and deposit requirements for Forms 941, 943 and 944. Household employers should use Publication 926. For additional information, Form 941 and Form 944 filers can refer to Topic no. 757 and Topic no. 758 or the Instructions for the related form. Agricultural employers filing Form 943 can refer to Topic no. 760 or the Instructions for Form 943 PDF. Household employers filing Schedule H (Form 1040) can refer to Topic no. 756 or the Instructions for Schedule H (Form 1040) PDF. Federal unemployment tax forms If you're an employer in Puerto Rico, you might have to file a Federal Unemployment (FUTA) Tax Return. To see if you're required to pay FUTA taxes, refer to Publication 15 PDF or Publication 926 PDF (for household employers). With the exception of those who use Schedule H (Form 1040) for household employees, employers in Puerto Rico who are subject to FUTA are required to file Form 940 to report and pay FUTA taxes. Form 940 is filed annually and is due by January 31 after the end of the calendar year. If the due date for filing a return falls on a Saturday, Sunday or legal holiday, you may file the return on the next business day. Most employers are required to deposit FUTA taxes. If you have deposited all of your Form 940 tax on time, you have until February 10 (or the next business day, if applicable) to file. FUTA taxes aren't withheld from the employees' wages. See Publication 15 for information about the FUTA tax rate and the filing and deposit requirements for Form 940. Household employers should see Publication 926. For additional information, Form 940 filers can refer to Topic no. 759 or the Instructions for Form 940 PDF. Household employers filing Schedule H (Form 1040) can refer to Topic no. 756 or the Instructions for Schedule H (Form 1040) PDF.
