When a family member employs someone, the tax implications depend on the relationship and the type of business. Taxpayers and employers need to understand their tax situation. Here is what to know:
Tax Credit for Hiring Long-term Unemployed Workers
With many businesses facing a tight job market, employers should know about a valuable tax credit available to them for hiring long-term unemployment recipients and other groups of workers facing significant barriers to employment. If your business is hiring right now, the Work Opportunity Tax Credit (WOTC) may help.
Beware Third Parties Promoting Improper ERC Claims
Taxpayers are always responsible for the information reported on their tax returns. Businesses are encouraged to be cautious of advertised schemes and direct solicitations promising tax savings that are too good to be true.
Tax Withholding for Seasonal and Part-Time Employees
Many businesses hire part-time or full-time workers, especially in the summer. The IRS classifies these employees as seasonal workers, defined as an employee who performs labor or services on a seasonal basis (i.e., six months or less). Examples of this seasonal work include retail workers employed exclusively during the holidays, sports events, or during the harvest or commercial fishing season. Part-time and seasonal employees are subject to the same tax withholding rules that apply to other employees.
Worker Classification: Employee vs. Contractor
If you hire someone for a long-term, full-time project or a series of projects that are likely to last for an extended period, you must pay special attention to the difference between independent contractors and employees.