How to Handle One-Night Waiter or Waitress Payments for Your Restaurant: W-9 vs. 1099
Are you operating a restaurant and considering hiring a one-night waiter or waitress for a busy night? It's important to understand how to handle the payments and comply with tax requirements. In most scenarios, handling the tax obligation and record-keeping for a one-night worker differs from the regular employees. Here’s what you need to know.
Understanding the Differences: W2 vs. Independent Contractor
When you hire a regular employee to work at your restaurant, you get a W4 and I-9 form from them. This process ensures that you withhold federal, state, and local taxes, as well as FICA and Medicare taxes, and report their earnings on their behalf. For a one-night worker, you might be inclined to handle the tax obligation differently. But the truth is, you don’t get to “pick” how you report earnings for a worker. In most situations, the one-night worker will need to be treated as a W2 employee.
What is a W2 Employee?
A W2 employee is someone who works for you for a longer period than just a one-night shift. For such a worker, you will need a W4 and I-9 form, withholding federal, state, and local taxes, and FICA and Medicare taxes. You also need to report their earnings on Form W-2 and pay the associated taxes.
What About a One-Night Worker?
For a one-night waiter or waitress, it's crucial to remember that there are different reporting requirements. If the individual worked for you less than a year and their total earnings for the year didn’t exceed $600, you do not have to provide a 1099-MISC. However, the worker is still required to report the income on their own tax return.
Are You Required to Submit a 1099-MISC?
According to IRS regulations, if the total amount paid to an individual is over $600 in a single year, you are required to send a 1099-MISC form to that individual. This is true even if you pay them for a single night or a few nights. The only exception is if the worker provided you with an IRS Form 1099-NEC before you made the payment.
What to Provide the Worker?
For a one-night worker, you can provide them with a W-9 form. A W-9 is a request for their Taxpayer Identification Number (TIN) and confirms that they are treating the payments as business income. This provides a record for both you and the worker, ensuring that the worker reports the income correct on their tax return.
Conclusion: Compliance and Record-Keeping
When it comes to handling payments for one-night waiters or waitresses, it's essential to comply with IRS regulations and keep accurate records. Properly filling out the appropriate forms and withholding the necessary taxes ensures that everyone is on the right track for tax season.
In summary, you are not required to provide a 1099-MISC for a one-night worker if the total earnings for the year do not exceed $600. Instead, you should have them fill out a W-9. This approach ensures that the worker reports the income accurately, and you maintain compliance with tax laws and regulations.
Remember, adhering to these guidelines helps protect both you and your employees from potential tax complications and penalties. Always consult with an accountant or tax professional for specific advice tailored to your business's unique circumstances.
References and Further Reading
Reporting Payments to Independent Contractors - IRS.gov
Independent Contractor Self-Employed or Employee
IANAL (I Am Not a Lawyer)