Hiring Seasonal Employees

Ten Forty Plus Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Are you hiring seasonal employees? Is hiring seasonal workers on your busy season to-do list? Here are tax rules to keep in mind. Affordable Care Act exception. When you employ 50 or more full-time workers, you're considered a "large employer" and are generally required to provide health insurance coverage or pay a penalty. However, the law provides an exception for seasonal workers, defined as those you employ for not more than 120 days during the prior calendar year. In general, your answer to two questions determines if you qualify for the exception. Did your workforce exceed 50 full-time employees for 120 days or fewer during the year? Are the employees in excess of 50 who were employed during that period seasonal workers? If both answers are yes, you're generally not considered a large employer. Employment taxes. Temporary workers are typically subject to the same employment tax rules as regular employees. You'll generally have to withhold social security and Medicare taxes, as well as federal income tax from wages. You'll also have to follow payroll tax deposit rules and employment return filing requirements. Employment tax returns. Special filing rules may apply when you only hire employees at a specific time of year, such as the holiday season. For each quarter that you pay wages, you can check the box for "seasonal employer" on "Form 941, Employer's Quarterly Federal Tax Return." By notifying the IRS of your seasonal status, you're not required to file returns for quarters when you have no wages or tax liability. State rules. In addition to reporting these employees as new hires and filing quarterly state payroll reports, you may have to request classification as a seasonal employer by completing a special form. In some states, you're required to reapply periodically. Qualifying as a seasonal employer can affect your staff's eligibility for unemployment benefits as well as your experience rating, which determines your tax rate. Please call us for more information about payroll tax rules, recordkeeping requirements, and documentation for seasonal employees. We're here to make sure your busy season goes smoothly. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker Ten Forty plus Quality Tax Preparation & Financial Services www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com