During the summer, many companies recruit part-time and full-time labor. The IRS defines these people as seasonal workers, which is defined as an employee who does seasonal labor or services (i.e., six months or less). Examples of seasonal employment include retail personnel engaged just during vacations, sporting events, harvest, or commercial fishing seasons. Part-time and seasonal workers are subject to the same tax withholding regulations as full-time workers.
When beginning new employment, every taxpayer completes a W-4. This form is used by employers to calculate the amount of tax deducted from your paycheck. Taxpayers (including students) having various summer employment will wish to confirm that all of their employers withhold enough taxes to fulfill their entire income tax burden.
Revisions to Withholding Due to Tax Reform
As a reminder, the Tax Cuts and Jobs Act altered tax law beginning in 2018, including raising the standard deduction, removing personal exemptions, boosting the child tax credit, restricting or eliminating some deductions, and modifying tax rates and brackets. Some taxpayers, such as those who are returning to the workforce, work part-time, or have seasonal employment, may be unaware of the tax law changes that might impact their salary.
Any modifications a part-year worker makes to their withholding amount have a greater effect on their paycheck than those of year-round workers. As such, now is an ideal opportunity to complete a “paycheck check-up” utilizing the Withholding Calculator, a specific tool on the IRS website that may assist taxpayers with part-year work in more correctly estimating their income, credits, adjustments, and deductions. In addition, it determines whether the right amount of tax is withheld based on the taxpayer’s financial status.
Using the Withholding Calculator Initially, the calculator requests a taxpayer’s employment dates in order to account for a part-year employee’s shorter job tenure, as opposed to assuming that their weekly tax withholding amount is applied to a full year.
The calculator then generates suggestions for part-year personnel. If a taxpayer has several part-time jobs, the Withholding Calculator may also take this into consideration.
Before utilizing the Withholding Calculator, taxpayers must have their completed prior-year tax return and most recent pay stub accessible.
Calculator outcomes are dependent on the correctness of the inputted data. If taxpayers’ circumstances change throughout the year, they should revisit the withholding calculator to see if their withholding should be adjusted. For taxpayers who work only part of the year, it is important to do a “paycheck check-up” at the beginning of their working term to ensure that their tax withholding is right from the outset.
The Withholding Calculator does not seek any personally identifying information, like name, Social Security number, address, or bank account details. The IRS does not record or preserve the data put into the calculator. Always be wary of tax scams, particularly those conducted by email or phone, and be especially vigilant for fraudsters imitating the IRS. Remember that the IRS does not send emails about the calculator or the input information.
If You Must Change Your Withholding
If the findings of the calculator suggest a change in the amount to be withheld, the employee must complete a new Form W-4 and send it to their employer as soon as feasible. Within ten days following a change in personal circumstances that decreases the amount of withholding allowances, employees must file a new Form W-4 to their employer with the adjusted withholding allowances.
As a seasonal or part-time worker, you may not be required to file a federal or state return if your earnings are less than the standard deduction; nevertheless, you may owe tax if you work several jobs.
Clearly, seasonal and part-time employees face specific tax circumstances. If you have concerns concerning your tax status, please contact the office immediately.