Know the Tax Rules for Part-time or Seasonal Help

As an employer, you normally have to file a quarterly Form 941 to report your employees’ wages and withholding. Each quarter, if you pay wages subject to income tax withholding (including withholding on sick pay and supplemental unemployment benefits) or Social Security and Medicare taxes, you must file a Form 941, although there are some exceptions.

However, seasonal employers don’t have a Form 941 for quarters where no wages have been paid and therefore no tax liability. You will find a line on Form 941 that lets you check a box noting that you are a seasonal employer and thus will not have to file a return for every quarter of the year.

The preprinted label on Form 941 doesn’t include the date the quarter ended. You need to enter it yourself when you file the return. The IRS doesn’t inquire about unfiled returns if at least one taxable return is filed each year. However, you need to check the seasonal employer box on every Form 941 you file.

Some businesses often need to hire workers on a seasonal or part-time basis for help with things such as sporting events, holidays, harvest season or commercial fishing. They even may hire temporary help for fireworks stands. Seasonal work is especially common in the hospitality industry. The IRS also has special guidance on independent contractors and employees, and there are detailed rules for farm workers.

You are required to keep good records so that you can file accurate returns. It’s a good idea to keep all receipts, payment information and tax data in one location to make filing your taxes easier. At the end of the day, the IRS doesn’t care how casual or irregular your hiring practices are, but your record keeping must be clear and you must follow all the rules.

Let us know how we can help you keep track of all your employees, no matter what their status is.