What Is Seasonal Income and How Is It Taxed?

Seasonal income is compensation earned during specific periods of the year rather than through consistent, year-round employment. This pattern of earnings is tied to the fluctuating demands of certain industries. For instance, a ski instructor’s work is concentrated in the winter months, while a tour guide in a popular summer destination earns primarily during peak tourist season. Similarly, agricultural workers may have high earnings during planting and harvesting seasons but little to no income during other parts of the year.

Common Sources of Seasonal Income

Many industries are structured around seasonal cycles, creating a demand for temporary labor. The tourism and hospitality sector is a source of this work, with businesses like beach resorts hiring for summer months and ski lodges requiring staff during winter. Agriculture is another field tied to the seasons, with labor needs peaking during planting and harvesting times, including at farms with seasonal attractions like pumpkin patches. The retail industry also experiences a seasonal surge during the end-of-year holiday shopping season, and tax preparation services see an influx of business between January and April.

Tax Responsibilities for Seasonal Earners

If you are hired as an employee, your employer will provide you with a Form W-2, “Wage and Tax Statement,” at the end of the year. Your employer withholds federal and state income taxes, as well as Social Security and Medicare taxes, from each paycheck. This process simplifies tax compliance, as the amounts are remitted to the government on your behalf.

Many seasonal workers operate as independent contractors and receive a Form 1099-NEC, “Nonemployee Compensation,” for payments of $600 or more from a single client. An independent contractor does not have taxes withheld by the paying entity. Individuals in this position are required to pay their own income tax and self-employment taxes, which cover Social Security and Medicare contributions. For 2025, this is a combined rate of 15.3% on the first $176,100 of earnings.

Because no taxes are withheld from their pay, these earners must often make estimated tax payments to the IRS. To calculate these payments, you must project your total annual income, estimate your tax liability, and then divide it by four. Failing to pay enough tax through this method can result in an underpayment penalty. Careful record-keeping of all income received and business-related expenses is a fundamental practice for managing these responsibilities.

These payments are due quarterly on April 15, June 15, September 15, and January 15 of the following year. If a due date falls on a weekend or holiday, the payment is due the next business day.

Proving Seasonal Income for Financial Applications

When applying for a mortgage or other loans, individuals with seasonal income must demonstrate a consistent and reliable earnings history to lenders. Financial institutions need to be confident that the income, despite its intermittent nature, is predictable enough to cover loan payments. The primary method for this is through documentation that verifies your financial stability over time.

To verify your earnings, lenders require the last two years of your federal tax returns, including all schedules and attachments like W-2s and 1099s. They will also ask for several months of recent bank statements to see the pattern of deposits. For those employed by a company, a verification of employment letter can be beneficial, as it can confirm the recurring nature of your seasonal job.

A common practice for lenders evaluating seasonal income is to calculate an average monthly income over a 24-month period. They will sum the total income reported on your last two tax returns and divide that figure by 24 to arrive at a qualifying monthly amount. This method smooths out the peaks and valleys of your earnings, providing a single, consistent figure they can use to determine your borrowing capacity.