If you're a business owner who's afraid of adding ITIN workers to your payroll, you're not alone.
As a payroll company that specializes in adding ITIN workers to payroll; we hear this all the time.
Business owners feel uneasy about:
Hopefully, the following will put your mind at ease.
Baron Payroll isn't a law firm, so we can't offer legal advice, but this is what we've seen and what we know to be true.
For over 20 years, Baron Payroll has successfully added ITIN (Individual Taxpayer Identification Number) workers to our clients' payrolls.
Let's get into it.
An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service (IRS) to individuals who are not eligible for a Social Security Number (SSN) but need a taxpayer identification number for federal tax purposes.
Concern: Employers wonder, "Is adding ITIN workers to my payroll even legal?"
Reality: While ITINs are used for tax purposes, they do not provide work authorization. Employers must still verify employment eligibility using Form I-9. This means an ITIN cannot replace the need for proper work authorization documents.
Concern: Managing payroll taxes for ITIN workers seems complex.
Reality: Employers must withhold federal income taxes, Social Security, and Medicare taxes for ITIN workers, just as they would for employees with SSNs. Proper tax reporting and compliance are crucial, and using payroll software or services can help streamline this process.
Concern: Different states have varying rules for ITIN workers.
Reality: It's important to stay informed about your state and local regulations. Some states have specific guidelines for hiring and tax reporting for ITIN workers. Consulting with a legal expert or a knowledgeable payroll service can help you navigate these rules.
There are four big benefits for your workers to get an ITIN number and for you to add them to your payroll:
Having workers with ITIN numbers allows you to pay them on payroll and comply with all the payroll tax regulations—which helps you minimize your financial risk related to potential audits from all the federal and state government agencies.
Additionally, paying your workers on-the-books as ITIN employees rather than off-the-books, also helps you minimize your financial and compliance risk related to potential investigations from both the federal DOL and your state DOL. 3.
Another important benefit to you is if your worker is injured while on the job, they’ll have insurance coverage from your workers compensation policy. Otherwise, you’d be stuck and have to pay for these medical costs out-of-pocket.
Additionally, you will be in compliance with the workers' comp laws and avoid stiff fines and penalties (up to $1000 per day).
And last but not least, most employers don’t have enough cash on hand every week to pay their workers off-the-books. This is a real problem these days and most employers would prefer not having to pay their workers with cash.
To ensure smooth and compliant hiring of ITIN workers, follow these best practices:
Ensure that all employees, including those with ITINs, complete Form I-9. This verifies their identity and employment authorization in the U.S. Remember, an ITIN alone does not prove work authorization.
Implementing a reliable payroll system can help manage tax withholdings and reporting for ITIN workers accurately. Consider using payroll services like Baron Payroll that specialize in handling these complexities.
Employment and tax laws are subject to change. Stay updated on any legal developments related to hiring ITIN workers. Regularly consult with legal or payroll experts to ensure ongoing compliance.
And that's it!
While the idea of adding ITIN workers to your payroll might initially seem daunting...
By understanding the legal requirements, utilizing a reliable payroll system, and staying informed about regulatory changes, you can move forward with confidence.
Wondering how much it costs to add your ITIN workers to your payroll?
Use our instant pricing calculator to get your instant estimate without talking to a salesperson.