Businesses often need to hire workers on a seasonal or part-time basis. For example, some businesses may need seasonal help for sporting events, holidays, and commercial fishing or harvest seasons.
Whether you are getting paid or paying someone else, questions often arise over the tax treatment of payments for part-time and seasonal help.
Part-time and seasonal employees are subject to the same tax withholding rules that apply to other employees. Your tax responsibility as an employer, as defined by the IRS are as follows:
1. As a business owner, when another person performs work for you, you must first correctly classify that person as an independent contractor or employee.
2. If the person is an independent contractor, refer to Forms and Associated Taxes for Independent Contractors for your tax responsibilities.
3. If the person is classified as an employee you must have an Employer Identification Number (EIN). Your tax responsibilities include withholding, depositing, reporting, and paying employment taxes. You must also give certain forms to your employees, they must give certain forms to you, and you must send certain forms to the IRS and SSA.
These rules are also explained in IRS Publication 15, Circular E, Employer's Tax Guide.
If you employ farm workers, follow the rules in IRS Publication 51, Circular A, Agricultural Employer's Tax Guide.
Seasonal Employer Tips for Filing Form 941: Seasonal employers do not have to file a Form 941 for quarters in which they have no tax liability because they have paid no wages. To tell the IRS that you will not file a return for one or more quarters during the year, check the Seasonal Employer box in part 3 on the Form 941 for every quarter you file. See section 12 of Pub. 15 for more information.
Employers of agricultural workers (farmworkers) use the information in this publication to comply with the laws for agricultural labor (farmwork) relating to:
The preprinted label for your Form 941 will not include the date the quarter ended. You must enter that yourself when you file the return. Generally, the IRS will not inquire about unfiled returns if at least one taxable return is filed each year. However, you must check the "Seasonal Employer" box on every Form 941 you file.