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December 12, 2017

Talent Tip Tuesday: EIN vs. W2

Almost all of The Hype! Agency’s Brand Ambassadors are categorized as W2 Temporary, Part-time Employees. This means that our staff are paid for hours worked and have all legally required Federal and State taxes, along with Social Security and Medicare taxes, withheld from their paycheck.  At the end of the year, the W2 Hype! staff receive a W2 form, which is necessary to complete your tax return at the end of the year. To keep tax situations clear and simple, it is Hype’s policy to have W2 Employees only work events within their home state.

Now how does that come into play when you’re on tour with The Hype! Agency? For our multi-state tours, we ask that staff differentiate themselves as an Independent Contractors with their own Employer Identification Number (EIN). An EIN is easy and free to apply for and can be obtained in just a few minutes through the IRS website. Once an EIN is obtained, it is used as a Taxpayer Identification Number, in place of a Social Security Number.

Independent Contractors are considered vendors of Hype!, not employees.  The payment received is the same as a W2 Employee, but no taxes are withheld from the payment. As an Independent Contractor, it is the Brand Ambassador’s responsibility to pay all required taxes on the income they receive. At the end of the year, all Independent Contractors that received over $600 in payments from Hype! will receive a 1099 Form stating the total amount of payments they received.  This amount is also reported to the IRS.

It is always best to check with your tax professional for any questions or concerns about obtaining an EIN. To update any payroll information, please reach out to directly.