When summer rolls around, Payroll often takes on a parental role, initiating summer hires into adulthood as they pay taxes for the first time. Make sure your processes are in order so that the summer hiring process runs smoothly.
√ Require new hires to present their Social Security cards. Use the Social Security Administration’s Social Security Number Verification Service to confirm that their names and Social Security numbers match. Surf to the SSA's website for information.
√ Photocopy new hires’ Social Security cards for W-2 purposes. Don’t put anyone on the payroll who doesn’t present his or her Social Security card.
√ Report new hires to the appropriate state agency.
√ Provide W-4s to new hires who have never worked for the company. Rehires who worked for the company earlier this year and who received an early W-2s must also file new W-4s. Rehires who worked for the company earlier this year but who didn’t receive early W-2s need not file new W-4s.
√ Verify all new hires by having them complete new I-9 forms with a revision date of “03/08/13 N”.
√ Enroll summer hires in your direct deposit or paycard program, and provide them with appropriate explanatory material.
√ Don’t enroll summer hires in your health and retirement plans. A manual override will be necessary if you have auto-enrollment cafeteria and 401(k) plans.
√ Students probably aren’t exempt from federal income tax withholding. To find out, provide them with IRS Pub. 3136, which is available at the IRS website. However, they may be exempt from state withholding, so have state W-4 forms for them to complete.
√ If you hire your children, thoroughly document their work to avoid suspicion that you’re deducting their allowance as a salary expense; pay them when other employees are paid and what other employees with comparable duties are paid.
√ Sole proprietors or members of spousal partnerships who hire their children may not owe FICA or FUTA on their wages. Children younger than 18 who work in their parents’ business are exempt from FICA and FUTA; children between the ages of 18 and 20 are exempt from FUTA.
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