As we enter tax season, there may be employees who feel overwhelmed and confused by the tax filing process. While filing taxes as a W-2 employee is relatively straightforward, there are nuances to everyone’s financial situation that may impact how they choose to maximize their earnings. There are professional tax experts that can help your employees, but these services cost money and some employees may not be in a financial position to cover these costs. Helping your employees prepare for tax season is a great way to show that you care about their financial well-being and want to look out for their best interests. Here are three ways to help your employees prepare for tax season:
The W-4 form determines how much of an employee’s earnings are withheld by the federal government. Individuals can claim allowances depending on what they’re eligible for and how much money they’d like withheld during the year. Generally, more allowances claimed means less taxes will be withheld from each paycheck (they’ll get more money in their paycheck).
Employees may need clarification as to what each allowance means and how it will impact their financial situation. Some employees automatically opt to withhold more during the year so they receive a larger tax return the following year. However, they might be better served by utilizing the extra cash flow during the year instead of waiting for that anticipated return.
For some employees, the W-4 form is an opportunity to increase their monthly cash flow which could be all the support they need to reduce money-related stress throughout the year. As an employer, this is a simple area where you can help your employees better understand their options and feel empowered to make a decision that affords them the best opportunity to maximize their earnings.
Once they understand how to fill out a W-4 form, the next step is to understand the various tax filing decisions they must make and/or report. This can be a challenge for employees if they don’t understand or recognize qualifying investments, income opportunities, or deductible expenses. Here are a few areas where your employees may benefit from your guidance:
These scenarios create questions and your employees may not have a resource to get the answers. As an employer, you can help by introducing them to reliable resources.
There is a wealth of information available online – the hard part is often knowing where to start and what sources to trust. Your employees look to you for guidance – if you offer a financial wellness benefit, you are already aware of the many resources and services that your employees could take advantage of. Here are a few additional ideas:
Through your HR department or even as the CEO/President if your organization is smaller, invite a local CPA firm to talk about the nuances of tax filing and answer questions. This could be onsite or through a virtual webinar, depending on the structure of your organization. Your employees will be able to ask questions directly to an expert in the field.
Let them know that their financial wellness benefits program is always available for questions and continue to communicate, communicate, communicate. Throughout this process, work closely with your financial benefits program provider to create a seamless experience for your employees.
Between family, work and life events, it can be easy for employees to forget about the filing deadline. Help them out by sending gentle reminders throughout tax season.