The Do’s and Don’ts of H-2A Onboarding: Social Security, Taxes, and Deductions

H-2A employers often breathe a sigh of relief when they receive approval on their visa petition from U.S. Citizenship and Immigration Services (USCIS). Understandably so, given that this milestone marks the end of the government approval gauntlet, with all the scrutiny that it entails. From here, it’s simply a matter of scheduling the consular appointments, booking bus arrangements, and waiting for the workers to arrive. Right? 

Well, not so fast. There is still much work to be done, both to prepare for workers’ arrival and to get them situated once they’re here. This series spotlights best practices and guidance on various onboarding topics. Today’s focus is on Social Security, taxes, and deductions. 

Social Security 

If your H-2A workers have not previously worked in the U.S., you should help them apply for a Social Security number. Returning workers who already have a Social Security number do not need to reapply. 

There are tax and payroll implications for not timely obtaining the Social Security number. For example, workers may be subject to mandatory tax backup withholdings until it is issued. Given the delays in Social Security issuance, IRS guidance now says that H-2A workers may apply for an Individual Taxpayer Identification Number (ITIN) as a stop-gap measure.  

Social Security numbers are also necessary for creating an E-Verify case. E-Verify employers should select “Awaiting Social Security” when creating a case for newly hired workers who do not yet have their Social Security number. 

Taxes & Withholdings 

Per the H-2A regulations, employers must make all deductions required by law. For U.S. workers, this includes income tax withholdings, FICA, FUTA, and SUTA. 

When it comes to H-2A workers, however, such workers are exempt from Medicare and Social Security taxes, and are not subject to FICA or FUTA withholdings. In some cases, however, they may be subject to SUTA withholdings if there is not an express exemption under state law. Employers should always consult with an accountant or tax professional in their state to determine the appropriate withholdings for foreign workers. 

When it comes to income tax, H-2A workers must pay federal and state income taxes as applicable. Just like U.S. workers, H-2A workers are also required to file a tax return. They are not, however, subject to mandatory tax withholdings. The decision to withhold federal income tax must be mutually agreed upon by the employer AND the worker. The IRS website has additional guidance and resources.  

Employers should always inform workers in writing that tax withholdings are voluntary. If the worker chooses to have taxes withheld, they should complete a Form W-4. Note that most H-2A workers will not have a tax liability at the end of the year, and thus choose not to withhold.  

Other Deductions  

All voluntary deductions must be disclosed in the Job Order and pre-authorized by the worker in writing. Ideally, this would occur as part of the onboarding process. In any written deduction authorization form, you should ensure that the form notes the voluntary nature of the deduction and specifies the exact amount (if possible) that will be withheld each pay day. 

Generally, voluntary deductions may only bring a worker’s pay below minimum wage in limited circumstances that are purely for the worker’s benefit.  Examples include retirement plan contributions, health insurance coverage, and savings plan contributions.  Other deductions must be reasonable and not bring the worker’s net pay below minimum wage.