Seasonal employees are paid and taxed like year-round employees: you withhold income tax and FICA under the same rules and give them a W-2. What differs: you can skip Form 941 in quarters with no wages if you check the seasonal box on line 18 of every 941 you file, returning workers don't always need new I-9s but usually need a new-hire report, and unemployment tax lands early in the season because it applies only to each worker's first dollars of the year.
Can seasonal workers be paid as contractors?
Not because the job is temporary. A summer scooper working shifts you schedule, with your equipment, is an employee for three months or three years. The IRS applies the same withholding rules to part-time and seasonal help as to everyone else. If they're your first employees, start with the checklist for hiring your first employee.
For 2026, that means withholding 6.2% Social Security (on wages up to $184,500) and 1.45% Medicare from each paycheck, matching both yourself, and withholding federal income tax based on the employee's Form W-4 (Form 941 instructions). If you're unsure about a particular worker, see how to tell an employee from an independent contractor.
Do I file Form 941 in the off season?
Not if you paid no wages that quarter and you check the seasonal employer box. Normally, once you file your first Form 941 you file one every quarter, even with nothing to report. Seasonal employers are the exception: they "don't have to file a Form 941 for quarters in which they have no tax liability because they have paid no wages".
The catch is the box. You tell the IRS you're seasonal by checking line 18 (in Part 3) on every Form 941 you file, not just the last one of the season. If you don't, "the IRS will expect a return to be filed for each quarter".
For 2026, Form 941 is due:
| Quarter | Months | Due date |
|---|---|---|
| Q1 | Jan–Mar | April 30, 2026 |
| Q2 | Apr–Jun | July 31, 2026 |
| Q3 | Jul–Sep | November 2, 2026 (October 31 is a Saturday) |
| Q4 | Oct–Dec | February 1, 2027 (January 31 is a Sunday) |
Each return is due the last day of the month after the quarter ends, or the next business day if that falls on a weekend (Form 941 instructions).
Does the seasonal exception cover Form 940 too?
No. Publication 15 limits the seasonal exception to "Form 941 only". Form 940, your annual federal unemployment (FUTA) return, is still due for every year you had employees. The 2026 Form 940 is due February 1, 2027, because January 31 is a Sunday, or February 10 if you deposited all FUTA tax on time (IRS Topic 759).
Which quarter do end-of-season wages belong to?
The quarter you pay them in, not the quarter the work happened (Pub 15). If your stand closes on September 27 and the final paycheck goes out on October 2, those are fourth-quarter wages, and you owe a Q4 Form 941, seasonal box checked, for one paycheck.
To keep the season inside fewer quarters, schedule the last payday before the quarter ends, as long as that still meets your state's rules for when a final paycheck is due.
How do deposits work for a seasonal business?
You deposit only for periods in which you paid wages. Publication 15's own example is a seasonal employer that paid wages in March and none in April, so it "doesn't have a deposit requirement for April".
In your first calendar year as an employer you're a monthly depositor: each month's taxes are due by the 15th of the next month. If a quarter's total tax is under $2,500, or the prior quarter's was, you can generally pay with the return instead (Pub 15). From year two, see monthly vs. semiweekly deposits.
Why is unemployment tax so high at the start of the season?
Because FUTA and most state unemployment taxes apply only to the first slice of each worker's wages, and a seasonal worker earns that slice early. FUTA is 6.0% on the first $7,000 per employee per year, reduced to a net 0.6% by the credit for paying state unemployment tax in full and on time, so it tops out at $42 per employee (IRS Topic 759). You owe FUTA if, this year or last, you paid $1,500 or more in wages in any calendar quarter or had at least one employee on some part of a day in 20 or more weeks.
State wage bases vary widely. For 2026, California and Florida tax the first $7,000, Maine the first $12,000, and Washington the first $78,200 (DOL, Significant Provisions of State UI Laws, January 2026). Coverage thresholds vary too: most states follow FUTA's test, while California covers any employer that pays over $100 in wages in a quarter. Find your state's agency in the DOL state UI directory.
Do returning workers need new paperwork?
Sometimes. Each form has its own rule.
Form I-9
A returning seasonal worker may not need a new I-9 at all. USCIS lists seasonal employment as a situation that can count as continuing employment, where no new form is required. The test is whether the worker reasonably expected to come back, based on factors such as your history of recalling workers, whether you filled their position permanently, and what you told them.
If it's a true rehire within three years of the date you completed their original I-9, you can fill out Supplement B or complete a new I-9, and you must reverify if their work authorization has expired. After three years, they complete a new I-9. Keep each I-9 for three years after the hire date or one year after employment ends, whichever is later (USCIS M-274 §10.0).
New-hire report
Federal law counts a returning worker as a new hire if they were separated from your business for at least 60 consecutive days (42 U.S.C. 653a). Most off seasons are longer than that, so you report them again. The federal deadline is 20 days after the hire date, and some states require it sooner. See new hire reporting for how it works.
Form W-4
Publication 15 tells employers to ask each new employee for a current-year W-4 and says an older W-4 stays in effect until the employee gives you a new one (Pub 15). It doesn't address returning seasonal workers directly. Asking each one for a current Form W-4 is the safe practice, because a student's situation can change a lot in a year.
Can seasonal employees collect unemployment between seasons?
In most states, yes, and it can raise your unemployment tax rate. States charge benefits paid to your former workers against your account; California, for example, says benefit charges "can impact your UI rate". A few states limit between-season benefits for employers the state has designated as seasonal, including Michigan (you apply in writing at least 20 days before the season starts) and Massachusetts. See how seasonal layoffs affect your unemployment tax rate.
Worked example: a summer ice cream shop in California
A first-year California ice cream shop pays six employees $15 an hour for 30 hours a week ($450 each). The season runs 20 weekly paydays, from May 1 to September 11, 2026: 9 in Q2 and 11 in Q3.
Wages: $450 × 20 = $9,000 per employee, $54,000 for all six. Q2 wages are $24,300 (6 × 9 × $450) and Q3 wages are $29,700 (6 × 11 × $450).
FICA: 7.65% × $54,000 = $4,131 from the employer, plus another $4,131 withheld from employees. On Form 941, combined FICA is $3,717.90 for Q2 (15.3% × $24,300) and $4,544.10 for Q3 (15.3% × $29,700), plus the federal income tax you withheld. As a first-year employer, the shop is a monthly depositor.
FUTA: Each worker reaches $7,000 on the 16th payday ($7,000 ÷ $450 = 15.6 weeks). Q2 FUTA wages are $4,050 per person, so 6 × $4,050 × 0.6% = $145.80. Q3 picks up the remaining $2,950 each: 6 × $2,950 × 0.6% = $106.20. That's $252 for the year, or $42 per employee, and because it's under $500 it can be paid with Form 940 (IRS Topic 759).
California was a FUTA credit-reduction state for 2025, owing an extra 1.2% on FUTA wages, and DOL's potential-2026 list, updated September 11, 2026, projects 1.5% (up to 5.3% if the estimated "BCR add-on" is not waived, as it was for 2025). The figures here assume no reduction. DOL certifies the final 2026 rates after the November 10, 2026 repayment deadline, in time for the 2026 Form 940, so check your state on the DOL credit-reduction list before you file.
California UI and ETT: New California employers pay 3.4% UI on the first $7,000, plus 0.1% Employment Training Tax on the same $7,000 (EDD). UI is 6 × $4,050 × 3.4% = $826.20 in Q2 and 6 × $2,950 × 3.4% = $601.80 in Q3, $1,428 total. ETT is $7 per employee, $42 total.
| Employer tax | Per employee | All six |
|---|---|---|
| Social Security + Medicare (7.65%) | $688.50 | $4,131.00 |
| FUTA (0.6% of $7,000, before any credit reduction) | $42.00 | $252.00 |
| California UI (3.4% of $7,000) | $238.00 | $1,428.00 |
| California ETT (0.1% of $7,000) | $7.00 | $42.00 |
| Total | $975.50 | $5,853.00 |
Every worker passes the $7,000 FUTA and California UI limit by mid-August, so the last four paychecks carry only FICA and withholding.
Filings: Form 941 for Q2 (due July 31, 2026) and Q3 (due November 2, 2026), with line 18 checked on both. No Q1 or Q4 return. Form 940 and W-2s are due February 1, 2027 (W-2/W-3 instructions).
What does payroll cost in the months you don't run it?
No payroll tax, but possibly a software bill. Many payroll products charge a monthly subscription whether or not you run payroll, so a business with staff five months a year pays for seven months it doesn't use. See paying for payroll software in months you don't use it.
CheckMate charges only when you run payroll, with no monthly, annual, subscription, or setup fee. In a month with no payroll, you pay nothing.
What to do next
- Pull up your most recent Form 941 and confirm line 18 is checked. If it isn't, check it on every return from now on.
- Put November 2, 2026 (Q3 Form 941) and February 1, 2027 (Form 940 and W-2s) on your calendar. If your last paycheck lands in October, add Q4.
- Before next season, decide which returning workers are continuing employment and which are rehires for I-9 purposes, and plan to report anyone gone 60+ days on your state's new-hire site.
- Look up your state's 2026 wage base and your rate on your state UI agency's site so you can budget for the early-season tax load.
- After November 10, 2026, check the DOL FUTA credit-reduction list for your state's certified 2026 rate, before you file Form 940.
FAQ
Do seasonal workers get a W-2? Yes. Every employee you paid during the year gets a W-2, even for a few weeks of work. 2026 W-2s are due to employees and the Social Security Administration by February 1, 2027 (W-2/W-3 instructions).
Do I have to pay overtime to seasonal staff? Generally, yes. FLSA §13(a)(3) exempts only amusement or recreational establishments, organized camps, and religious or nonprofit educational conference centers that operate seven months a year or less, or whose six slowest months average no more than one-third of the receipts of the other six (WHD Fact Sheet #18). A landscaper doesn't qualify.
Can I hire 14- and 15-year-olds for the summer? Yes, in non-hazardous jobs, up to 8 hours a day and 40 hours a week when school is out, and until 9 p.m. from June 1 through Labor Day (DOL YouthRules). Many states are stricter; compare yours in the DOL state child labor table.
Do seasonal workers count toward the ACA's 50-employee threshold? Yes, but you're not an applicable large employer if last year you were over 50 full-time employees and equivalents for 120 days or less (or four calendar months, not necessarily consecutive) and everyone above 50 in that stretch was a seasonal worker (26 CFR 54.4980H-2). If you're near 50, have a benefits advisor or CPA run the count, because the equivalents math depends on each person's hours.
Can I hire workers from abroad for the season? The H-2B program covers temporary non-agricultural workers for a seasonal or peak-load need. You need a temporary labor certification from DOL before filing the USCIS petition (DOL H-2B).
Sources
- IRS, Part Time or Seasonal Help
- IRS, Instructions for Form 941 (03/2026)
- IRS, Publication 15 (2026), Employer's Tax Guide
- IRS, Topic 759, Form 940 – Employer's Annual Federal Unemployment (FUTA) Tax Return
- IRS, Schedule A (Form 940) for 2025
- IRS, General Instructions for Forms W-2 and W-3 (2026)
- IRS, About Form W-4
- U.S. Department of Labor, Significant Provisions of State UI Laws, January 2026
- U.S. Department of Labor, FUTA Credit Reductions
- U.S. Department of Labor, Contacts for State UI Tax Information and Assistance
- California EDD, Rates and Withholding
- California EDD, Tax-Rated Employers
- Michigan Legislature, MCL 421.27
- Massachusetts Legislature, M.G.L. c. 151A §24A
- USCIS, M-274 §8.0, Rules for Continuing Employment
- USCIS, M-274 §6.2, Reverifying or Updating Employment Authorization for Rehired Employees
- USCIS, M-274 §10.0, Retaining Form I-9
- USCIS, Completing Supplement B, Reverification and Rehires
- 42 U.S.C. 653a, State Directory of New Hires
- Administration for Children and Families, State New Hire Reporting Websites
- 26 CFR 54.4980H-2, Applicable Large Employer
- 29 U.S.C. 213, Exemptions
- U.S. Department of Labor, WHD Fact Sheet #18, Seasonal Amusement or Recreational Establishments
- U.S. Department of Labor, YouthRules: Young Workers Ages 14 and 15
- U.S. Department of Labor, State Child Labor Laws
- U.S. Department of Labor, H-2B Program