The holidays are the perfect time for hiring a few helping hands during your business’s busy season. Hiring short-term employees help to avoid the expensive burden of paying all of your current full-time employees time and a half holidays. Take a quick coffee break and let’s discuss what you need to know about seasonal hires & 1099 employee taxes.
What You Need To Know About Seasonal Hires & 1099 Employee Taxes
The Difference Between Seasonal Employees & Independent Contractors
Seasonal employees and independent contractors are oftentimes confused by business owners. During the holiday season, many small businesses take advantage of the help that independent contractors offer, mostly because they are hired simply to perform specific tasks and are not considered a full or part-time employee –– which makes a big difference when filing taxes.
Contracting the services of independent contractors during the holiday season eliminates the responsibility of providing benefits, withholding taxes, paying unemployment taxes, and worrying “do you have to pay time and a half on holidays?” Although you cannot dictate the hours that independent contractors work, you must report compensation of $600 or more to the IRS for 1099 employee taxes.
Labors Laws Must Be Enforced
Regardless of your employees’ work classification (part time, full time, or seasonal), labor laws must always be enforced in the workplace.
Any form of harassment or discrimination is strongly prohibited and by law, workplace health and safety laws must remain in effect for short-term staff members.
Note: Seasonal employees are protected by the Fair Labor Standard Act in regards to minimum wage, overtime, child labor, and recordkeeping.
So do you have to pay time and a half on holidays for contractors? Because of FLSA protections, the answer is no. While time and a half holidays count for all your employees, any contractors you hire for the holidays are subject to their flat rate and 1099 employee taxes, but not to time and a half holidays.
Benefits for Seasonal Hires
Seasonal, part-time, and full-time employees must receive certain benefits by law when employed by a company. It is the employer’s responsibility to withhold Social Security and Medicare taxes from employee wages, and the employer is typically obligated to provide unemployment benefits to temporary and seasonal employees.
Note: Some exceptions exist for those employed 10 weeks or less.
Are Time and a Half Holidays Necessary?
Do you have to pay time and a half on holidays for your seasonal employees? Or any employees? Technically…no. You are not required by law to pay your workers time and a half holidays, but you are required to pay any workers for any hours worked beyond a standard 40-hour workweek. So while it’s not a legal requirement, time and a half for holidays can do wonders for morale…and for spreading the holiday spirit.
How To Handle 1099 Employee Taxes
If your business compensated an independent contractor $600 or more for their services, you must file a Form 1099-MISC to handle their 1099 employee taxes.
Form 1099-MISC is used to report miscellaneous income or payments made by businesses to people not considered to be its employees for various services performed. Examples of miscellaneous income include payments made to subcontractor wages, rental payments, prizes, awards, and more.
IRS Form 1099-MISC can be filed easily with TaxBandits in just five steps:
- Create an account
- Add payer details
- Add recipient details
- Enter amounts
- Pay and transmit
Create your free TaxBandits account today to get a head start on your 1099 employee taxes and W2 Form 2018. The January 31st deadline to provide contractors with a copy of their 1099 tax form will be here before you know it. Let TaxBandits help save you time and keep your small business tax compliant.