Interns and Unemployment

Today TaxMama hears from John in the TaxQuips Forum, who wants to employ students.“ The business I work for is very small. It is a nonprofit educational facility, and we are swamped with work, without financial leverage to hire additional staff.  I want to recommend the hiring of interns at a fair hourly wage.  I am a recent college graduate and I know department heads love to advertise internship opportunities to their students.  My question is – I know we would have to add them to payroll and have payroll taxes taken out. But what about the implications of hiring these students for seasonal opportunities or something like 3/4 month assignments?  When we let them go for a new round of interns, will they be able to try to collect unemployment benefits?”

Hi John,

Oh yes, I can just see those unemployment percentage rates zooming up!

Think about this, if you’re concerned about racking up unemployment credits.  Talk to the college about offering grants to students.  I’ve seen people come to me who have received grants that required them to do so many hours of work with the university or a sponsor.  That would get you the interns.

That would get money into the hands of the interns.  They would pay tax on the money, regardless – unless the grants were designed to cover the cost of their tuition and/or books/supplies (which might be an even better idea).  Money for tuition and books would not be taxable. Your company would not have to deal with payroll or unemployment.  The students get the benefit of experience and training in a forward-looking company.

 What do you think?

And remember, you can find answers to all kinds of questions about hiring and other tax issues, free. Where? Where else? At www.TaxMama.com.

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2 thoughts on “Interns and Unemployment

  1. sarah neider says:

    Hi Eva and John, You might also call the EDD and ask what they think. There could be an exception for interns and other very short term workers that you don;t know about yet. It would be a shame if you were not able to offer this work experience to young people because of the threat of higher unemployment rates. Also how much money do you have in your UI account? You might also ask the EDD how they calculate the rate increase when you have a positive balance in your account.

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