Depending on your business, you may need to hire seasonal or temporary workers. For instance, retail stores need additional help during the holidays. Others need more hands for sporting events. In fact, spring training stadiums need to employ an entire staff of personnel in March. Whatever the reason – new people are needed. And that can come with questions over tax treatments and payroll.
When it comes to withholding tax, seasonal or temporary employees and their employers are subject to the same rules as all other employees. You must pay Social Security and Medicare taxes. It also includes state and local taxes. Unemployment benefits and workers’ compensation are also mandated. It is important to classify employees correctly, too. If it’s discovered a company is treating a regular employee as if he or she were temporary, fines can be imposed.
Guidelines created through the National Labor Relations Act and the Fair Labor Standards Act must be followed. Discrimination, harassment, and retaliation are all forbidden. That being said, it’s always wise to be upfront with a temporary employee about the length and stipulations of his or her service. And because seasonal employees are hired on and treated like regular employees, they will need to file out a W-4 when onboarding and receive a W-2 for tax purposes.
So go out and hire seasonal employees like the wind – but be mindful of tax rules!
These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.