Employers need to apply the same accounting rules for seasonal workers.
Employers who hire seasonal workers are subject to the same tax withholding rules that apply to companies with regular employees. "Taxes are likely to be the furthest thing from people's minds as they focus on warmer days and summer vacations," Clark D. Kent, CPA and managing partner of the Lapeer office of Mattina, Kent & Gibbons, P.C. (MKG), said, "but it is imperative that companies complete the proper paperwork for these seasonal employees to avoid any legal pitfalls."
MKG, which provides audit, accounting, tax and business consulting services to a variety of industries, notes that many businesses hire employees to work in positions that are specifically in demand during Michgan's summer season, such as landscapers, resort workers, employees at swim and golf clubs, and agricultural laborers.
To comply with government rules and regulations, Kent says, "Employers need to take responsibility for ensuring that tax forms are completed appropriately and correct record-keeping takes place," calling it a cross between the accounting and human resources functions.
According to Kent, there are four important steps to take when hiring the seasonal employee:
1.) Verify that the employee is legally eligible to work in the United States with the U.S. Citizenship and Immigration Servies (USCIS) Form I-9 Employment Eligibility Verification.
2.) 2015 Form W-4 needs to be completed by every employee. In Michigan, a Form MI-W4, Employee's Michigan Withholding Exemption Certificate, also needs to be completed by every employee.
3.) New hire reporting: report any new employee to a designated state new hire registry. In Michigan, this is done on MI Treasury Form 3281 within 20 days of hire date. A new employee includes anyone who has not worked at the company previously or has not been employed there for at least 60 consecutive days.
4.) Name and social security number of each employee should be recorded from his or her social security card. If an employee does not have a social security number or a taxpayer identification number, he or she should apply for one.
"Taking care of these accounting matters up front mean fewer tax implications for both the employer and the employee after the season ends," Kent said. "Summer's laid-back attitude does not extend to federal and state reporting standards."