Navigating Social Security and Medicare Taxes for ITIN Workers: A Must-Know Guide for Employers

Navigating Social Security and Medicare Taxes for ITIN Workers

As a payroll company that will put your ITIN workers on your payroll, one question we always get is: 

"Do I need to withhold Social Security and Medicare taxes from my ITIN workers since they don’t have a Social Security number?" 

It’s a great question, and the answer is… yes. 

In this article, we'll delve into what you need to know to pay your ITIN workers on your payroll. 


What are ITIN Workers?

ITIN workers are individuals who do not have a Social Security Number (SSN) but have enough legal documentation to work in the United States. 

The IRS often issues them an ITIN or Individual Taxpayer Identification Number so they can be included on payroll. 

Despite their unique status, the payroll tax requirements for ITIN workers are exactly the same as your employees with SSNs.

Social Security Tax:

Standard Rate for Everyone: Social Security tax is set at 6.2%. 

Dual Contributions: The 6.2% tax for Social Security is withheld from your employee’s pay AND is also matched by the company and paid as an employer tax on behalf of every employee. So, the employee and the employer contribute 6.2% each to Social Security. 

Wage Cap Fluctuations: The maximum wage is subject to the 6.2% Social Security tax changes annually. It's important to stay updated on these changes to ensure accurate payroll calculations.

Medicare Tax Withholdings:

Standard Rate for Everyone: Like the Social Security tax, the Medicare tax is a joint responsibility. The standard rate is set at 1.45% for both employees and employers.

Additional Tax for High Earners: Employees earning above a certain threshold face an additional 0.9% Medicare surtax. It's crucial to note that this extra charge is the employee's sole responsibility; employers do not match this surtax.

Wage Cap Fluctuations: The standard Medicare tax and the additional surtax are calculated based on set wage limits, which, like Social Security, may change annually.

Compliance and Challenges:

To minimize your financial and legal liability, paying your workers on-the-books is always better than paying them in cash and off-the-books. 

The Dangers of Paying Off-the-Books: Paying workers in cash and off-the-books might seem convenient, but it exposes your business to significant financial and legal risks.

Complying with DOL and Workers Comp Laws: Proper payroll practices ensure compliance with Department of Labor regulations and Workers' Compensation laws, safeguarding your business from potential legal issues and financial crises.

Benefits Beyond Paychecks: When you include workers on payroll, they become eligible for your other employee benefit programs - such as group health insurance, retirement plans, etc. These added benefits increase job satisfaction, loyalty, and retention.

At Baron Payroll, we are committed to educating small and medium-sized business owners about the rules and regulations you need to know when you have employees. These are treacherous waters, and it’s very dangerous to go it alone.

Baron can lighten my workload and increase my profitability?
Let’s talk shop.

Book Time With Bill Elkins