Last Updated on March 31, 2025
All employers who pay wages subject to income tax withholding must file a quarterly tax form from the IRS, called form 941. This form reports employee wages and withholding. However, employers who hire seasonal workers must file Form 941 only for the quarters in which they are paying wages and withholding taxes.
During peak periods such as holidays, businesses hire seasonal employees to meet increased consumer demand.
According to the NRF, retailers planned to hire between 400,000 and 500,000 seasonal workers during the 2024 holiday season. In addition, major companies like Amazon and Target said they were looking to hire 250,000 and 100,000 temporary workers respectively for the holidays.
However, with hiring temporary workers comes payroll tax obligations. The Internal Revenue Service (IRS) mandates that part-time and seasonal employees are subject to the same tax withholding rules as full-time employees. This includes withholding for Social Security, Medicare, and federal income taxes.
This blog will walk you through everything you should know about payroll taxes for seasonal workers, from the special filing requirements, to Form 941, and more.
Seasonal employees are hired to meet the temporary increase in consumer demand during certain times of the year. Thus, their employment lasts for a defined period of time when extra labor is required, with no reasonable expectation of year-round employment. For example, temporary workers hired during planting and harvest times in the agricultural industry are one of the most common forms of seasonal work. The IRS has a detailed publication on Agricultural employer tax information.
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When filing payroll taxes, it’s important to distinguish seasonal employees from independent contractors. Employers have complete control over how, when, and where their temporary staff work, whereas, independent contractors work on their own terms to provide goods or services to the employer. For this reason, seasonal employees are eligible for certain protections and require employers to withhold applicable taxes. In contrast, independent contractors manage their own tax obligations.
All employers file quarterly payroll tax returns using Form 941 which reports employee wages and withholding for federal income tax. However, employers who hire temporary workers file their taxes a bit differently.
The IRS does not typically inquire about unfiled returns as long as you file at least one taxable return each year. Nonetheless, remember to check the seasonal employer box on every Form 941 you file during the quarters when you do have taxable wages.
Payroll taxes are tricky, and they get a lot more challenging when you hire seasonal employees. By keeping good records, and managing your payroll in one centralized location, like Excelforce, you can ensure tax returns are easier and more accurate.
At the end of the day, the IRS doesn’t care how casual or irregular an employer's hiring practices are, but record-keeping must be clear and must follow all the rules.
If you’re an employer struggling with filing taxes for temporary workers, Excelforce can help. Contact us today to learn how we’re helping countless businesses like yours with their payroll.
Excelforce helps you manage your payroll process with ease, so you can stay focused on growing your business.