Payroll Taxes: Miscellaneous

Here is some random and semi-interesting information from the Internal Revenue Service (IRS). I lifted these passages straight from the IRS. The IRS is a federal entity, these apply to everyone in the United States.

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Tips
Cash tips your employee receives from customers are generally subject to withholding. Your employee must re- port cash tips to you by the 10th of the month after the month the tips are received. Cash tips include tips paid by cash, check, debit card, and credit card. The report should include tips you paid over to the employee for charge customers, tips the employee received directly from customers, and tips received from other employees under any tip-sharing arrangement. Both directly and indirectly tipped employees must report tips to you. No report is required for months when tips are less than $20. Your employee reports the tips on Form 4070 or on a similar statement.

 

Family Employees

Child Employed by Parents
Payments for the services of a child under age 18 who works for his or her parent in a trade or business aren’t subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child.

Payments for the services of a child under age 21 who works for his or her parent, whether or not in a trade or business, aren’t subject to FUTA tax.

Payments for the services of a child of any age who works for his or her parent are generally subject to income tax withholding unless the payments are for domestic work in the parent’s home.

One Spouse Employed by Another
The wages for the services of an individual who works for his or her spouse in a trade or business are subject to income tax withholding and social security and Medicare taxes, but not to FUTA tax.

 

Part-Time Workers
Part-time workers and workers hired for short periods of time are treated the same as full-time employees for federal income tax withholding and social security, Medicare, and FUTA tax purposes.

Generally, it doesn’t matter whether the part-time worker or worker hired for a short period of time has another job or has the maximum amount of social security tax withheld by another employer.

 

Wages Not Paid in Money
If in the course of your trade or business you pay your employees in a medium that is neither cash nor a readily negotiable instrument, such as a check, you’re said to pay them “in kind.” Payments in kind may be in the form of goods, lodging, food, clothing, or services. Generally, the fair market value of such payments at the time they’re provided is subject to federal income tax withholding and social security, Medicare, and FUTA taxes.