Business Taxes: Employment Tax Withholdings for Part Time or Season Help

As we’ve been discussing in our Business Taxes blog series, your business will be required to pay certain taxes and file certain forms with the IRS if you have employees. These business taxes are commonly referred to as employment taxes or payroll taxes. However, the type of employment taxes your business is required to pay and the paperwork your business is required to file with the IRS depends on which type of employees your business employs. 

At the start of the series, we discussed the different forms and tax responsibilities the IRS requires of a business that hires 1099 independent contractors. To learn more about IRS forms like the W-9 and 1099-NEC, check out our previous blog posts, Business Taxes: 1099 Independent Contractors and Business Taxes: Form 1099-NEC.

Following that, in our blog post Business Taxes: Hiring W-2 Employees, we began to discuss the other common employment scenario: hiring W-2 employees. When hiring W-2 employees, employers are required to verify that their employees are legally allowed to work and have them fill out form I-9 with their SSN. As we learned in our most recent post, Business Taxes: Employment Tax Withholdings, employers are also encouraged to have new employees fill out Form W-4, which helps employers calculate employment tax withholdings.

In this blog post, we’ll look at the differences employers have to keep in mind when hiring part time or seasonal help.

Employment Taxes for Part Time or Season Help

As of January 31st, 2021, according to the IRS Page Part Time or Seasonal Help, “part-time and seasonal employees are subject to the same tax withholding rules that apply to other employees. For additional information on your tax responsibility as an employer, refer to Businesses with Employees. These rules are also explained in IRS Publication 15, Circular E, Employer’s Tax Guide.” The only major exception to the information in the above except is, as the IRS page Part Time or Seasonal Help goes on to say, “if you employ farm workers, follow the rules in IRS Publication 51, Circular A, Agricultural Employer’s Tax Guide.”

While this information might not seem too exciting, since it effectively just says that part-time and seasonal employees are treated the same as other employees, we wouldn’t write a blog about nothing! There are different rules that apply to seasonal employers.

Employment Taxes for Seasonal Employers

As of January 31st, 2021, according to the IRS Page Part Time or Seasonal Help, “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.”

As of January 31st, 2021, according to the IRS Page About Form 941, Employer’s Quarterly Federal Tax Return, “Employers use Form 941 to:

  • Report income taxes, Social Security tax, or Medicare tax withheld from employee’s paychecks.
  • Pay the employer’s portion of Social Security or Medicare tax.”

In essence, this means that seasonal employers do not need to file quarterly tax returns for quarters in which they don’t have tax liability because they didn’t pay any wages. However, you must check off the ‘Seasonal Employer’ box on any of the returns that your business does file!

In our next blog post, we’ll continue discussing business taxes, focusing on unemployment insurance next. Check back soon!


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