DiFatta & Associates

07/22/2026

Summer Hire Regs - Part 2

Businesses 100% parent-owned

Owners’ children—of any age
✔ Can work any number of hours or time of day. If under 16, cannot do hazardous work (e.g., use lawn mowers, sewing machines, or work near flammable or hazardous materials, or where food is cooked).

✔ If all employees are immediate family, owners’ children need not be paid the minimum wage. Caution: If even some regularly employed workers are not family, you are required to pay even family members the minimum wage.

Owners’ children under age 21
✔ Wages are exempt from FUTA.

Owners’ children under age 18
✔ If the business is 100% parent-owned, the children under 18 are exempt from F**A.

Not the owner’s children—under age 18
✔ If not the owners’ children, obtain an age certificate that is recognized by both the U.S. Department of Labor (DOL) and your state Wage and Hour Division (WHD). DOL often accepts state age certificates, but ask your state or local WHD to be sure. Return the certificate to the worker at termination.

✔ These workers may not do hazardous work.

Not the owners’ children—aged 14-15
✔ Can work 8 hrs./day, 40 hrs./wk., June 1-Labor Day, between 7 a.m. and 9 p.m., if school is not in session. Exceptions: Limits do not apply to news carriers or children who are employed exclusively by a parent/sole proprietor. For agricultural jobs, contact the DOL.

Not the owners’ children—under age 14
✔ Cannot be hired unless they work for a parent/sole owner.

Always check your state’s laws.

07/15/2026

Summer-hire payroll regs

Paid holidays and vacations
✔ Paid holidays for part-time and summer help are optional under federal law, just as for regular employees—but check state law.

✔ Paid vacation not required. But if you normally offer paid vacation, federal and state regs may apply.

Benefits
Temps and part-timers. Benefits are optional, but if offered, should be explained in a written benefits plan.

All employees (including owners’ children)
✔ Always obtain a W-4. Even from the owners’ children, student part-timers and foreign students.

✔ Always withhold FITW. Even from the owner’s spouse or child, unless a W-4 claims exempt.

✔ Always withhold F**A. Even from high school students and those receiving SS benefits. Exception: Children under 18 working for sole-owner parents.

✔ Always pay overtime for hours actually worked over 40 hours in the workweek. You are not required to include paid time off (holiday or vacation day hours). Do not substitute paid nonwork hours for overtime hours—i.e., make all hours straight time—to avoid overtime pay.

Example: Raj works 12 hours a day for the first 4 days of the workweek, but not on the 5th day, a holiday, for which he is paid for 8 hours. He is correctly paid 40 hours’ straight time + 8 hours’ overtime + 8 holiday (nonwork) hours. Raj’s employer cannot substitute 8 hours’ holiday pay for the 8 overtime hours to avoid the overtime rate.

Always check state law

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06/06/2026

Failure to update your payroll system now will result in a December/January tidal wave of manual calculations.

The 2026 W-2 has new or different boxes and codes that will require your payroll system to collect data throughout the year.

2026 Form W-2 changes. The two major changes are as follows:

1. Box 12 now has three new codes:
• Code “TA” stands for employer contributions to Trump Accounts. Employers can contribute up to $2,500 a year to each employee’s account, tax-free to the employee.
• Code “TP” indicates Total (cash) Tips reported to the employer.
• Code “TT” identifies total qualified OT compensation.

2. Box 14 is now split in two.
Box 14a, Other, is used for reporting state data and/or information of the employer’s choosing, such as:
• state disability insurance taxes withheld;
• union dues;
• payments for uniforms;
• health insurance premium deductions;
• nontaxable income; and/or
• educational assistance payments.

Box 14b, Treasury Tipped Occupation Code(s), verifies an employee’s job as being an occupation in which tips are received. This box requires two Treasury Tipped Occupation Codes (TTOCs).

Some PFML reporting is transitional for 2026. The IRS has extended through 2026 the “transition period” for reporting medical leave benefits paid by state programs. [Notice 2026-6, 2026-2 IRB 313]

New PFML reporting for 2026: Employers must report as taxable wages PFML contributions owed by the employee but paid by the employer.

2026 W-2c. The 2026 W-2c includes the same box and code changes as the W-2, so include these changes in your payroll system.

THIS IS HUGE:
2026 1099-MISC and 1099-NEC reporting. These forms will also be updated for 2026 and will have a new box for qualified OT pay. The 2026 threshold for sending a1099-MISC or 1099-NEC is $2,000 (was $600).

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05/26/2026

"Salary" and "stipend" are often mistakenly used interchangeably. Failure to understand the difference can lead to withholding errors, compliance problems, and even worker misclassification.

Salary. A fixed, recurring payment to full- or part-time employees each pay period in exchange for their ongoing service, regardless of hours worked. Salaried employees are generally exempt from OT pay requirements under federal law. Salary payments are usually processed automatically and may or may not include time tracking.

Stipend. A fixed payment, but usually non-recurring. Instead, it is for a specific and often individual purpose, such as training, education or expense reimbursement. Accordingly, it is usually a one-time or lump-sum payment—even though it may be paid at regular intervals, such as weekly or monthly.

Employers typically offer stipends:
• to support the cost an employee incurs for development or certification;
• to offset a trainee’s, intern’s or IC’s expenses;
• to encourage participation in wellness, transportation or remote-work programs;
• to provide flexibility in benefits because they do not require adjusting base pay.

Example: A resident in a hospital, although a student still in training, is a licensed physician working full-time, so compensation is salary.

On the other hand, interns, fellows, apprentices, trainees or volunteers in the same hospital may not be employees as defined by federal law, so their pay is a stipend: it is not paid for ongoing service at a set amount but covers costs associated with professional development, which can include housing, food and transportation.

Stipends are often used to attract and invest in individuals whom employers hope will become employees, often for roles that are part of a broader program, and to pay for government-regulated training programs.

Stipends for workers who are not defined as employees under federal law may amount to less than the minimum wage because stipends are not based on hours worked.

Whether are not stipends are taxable income depends on how they are structured. For details on stipend taxation and reporting, see IRS Pub. 525, Taxable and Nontaxable Income.

Depending on the workforce, the right stipends can boost worker satisfaction; strengthen retention of trainees, apprentices, interns, fellows or ICs; and sometimes even employees; and make your firm a place known for investing in its people.

Stipends worth considering include:
• Education or training stipends that cover tuition, certification or professional development.

• Wellness stipends that cover gym memberships, fitness classes, or ergonomic equipment, all of which encourage a healthy lifestyle.

• Technology or remote work stipends that offset internet, phone, or the cost of setting up a home office for remote and hybrid workers and teams.

• Transportation stipends that help cover commuting expenses, such as the cost of public transit passes, parking, or fuel.

• Meal or living stipends that provide support for employees’ off-site training or temporary relocation.

When to offer stipends
When to offer stipends is as important as knowing what kinds of stipends to offer. Timed properly, stipends can represent powerful employer support at the right moments, such as onboarding, spurring career development, and adapting to a new work environment.

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