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Issuing W-2s for Wages of $100 or Less
How do we handle FICA and Medicare wages that have been withheld?

Page 9 of IRS publication 15-A states that if an employee receives less than $100 then a W-2 need not be issued. Is this $100 rule an option or a requirement?

Since I don't know whether an employee will make less than $100 until they stop working, I will have cut paychecks with taxes withheld. What do I do with the money withheld and sent into the government using a 941? Do I have to back it out of the next 941 and reimburse the employee for the amount withheld?

I run into this situation regularly. We hire high school students as part-time janitors. Sometimes the work schedule doesn't fit, and they quit after having worked only a few days. Similarly, we hire women as paid babysitters. Again, some decide it's not the right job and quit after earning only a few hours at minimum wage.

Publication 15-A addresses only whether wages are subject to FICA and Medicare taxes. It does not address the requirement to issue Form W-2. This publication's authority for this statement is found in Internal Revenue Code Section 3121(a)(16).This IRC Section exempts from FICA and Medicare wages payments by Section 501(c)(3) organizations (including churches) if the total remuneration for the calendar year is less than $100.

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February 14, 2012