Photo by Olga DeLawrence on Unsplash

7 Quick Ways to Help Your Employees More This 2020 Tax Season

By Tiffany Ordoñez, Financial Coach

Time’s a ticking.

The July 15 tax deadline is just a month away.

The world post-coronavirus may feel different in many ways, but the standard process for many employers when it comes to taxes remains:

1. Employers share W2 forms.
2. Most employees wait until the last minute to complete their taxes — crossing their fingers for a good return. According to the IRS, every year between a quarter and a third of Americans file their tax returns within two weeks of the deadline.

It sounds simple. But the truth is, handling taxes remains a confusing endeavor for most, even more so in these heightened times with many workers with reduced hours, furloughed, or laid-off.

A 2019 survey showed that 77% of Americans couldn’t pass a 4-question quiz on new tax law changes. So it’s no surprise that there’s an uptick in questions during tax season, such as:

• Where’s my W2?
• Where can I prepare my taxes for the lowest cost?
• Should I prepare my own taxes to save?
• Why are my taxes being garnished?
• After I’m done, how do I know I didn’t make an error that’s making me pay more than I should?

What You Can Do as an Employer

As an employer or HR benefits provider, you are in a unique position to help.

At TrustPlus, we see good things happen (like higher employee retention and attendance) to companies who make the extra effort to help employees get ahead with their finances. And many employers are looking for ways to help employees (whether active, furloughed, and recently laid-off), without breaking the bank.

The solution can be as simple — and cost-effective — as more thorough communications scheduled at the right time.

What the Extra Effort Means to Your Workers

According to a survey by CreditKarma, about 44% of taxpayers expect their tax refund will be their biggest paycheck of the year. And at this point in time, 40% of Americans don’t have $400 set aside for an emergency.

This means tax returns are a big deal for most Americans. Every dollar counts. With many employees cash-strapped and filing taxes being a requirement to receive stimulus funds, filing taxes is more urgent than ever.

7 Steps to Help Your Employees This Tax Season (And Their Finances Overall):

1. Go above and beyond in your W2 communications. Communicate to your employees that W2 forms have been distributed. Remind them that it’s available, and avoid mailing if possible. Post on your company Intranet in a clear, visible place.
2. Set automated reminders. “Did you file? The deadline is July 15. P.S. Did you remember to put aside $500?”
3. Remind them that there are places that can help them file taxes for free. The IRS’ Volunteer Income Tax Assistance (VITA) program offers free tax preparation help to people who generally make $56,000 or less, persons with disabilities, and limited English-speaking taxpayers. They can find a VITA site on the IRS website. They can also take advantage of free online tax filing services, also available on the IRS website.
4. Dispel the myths and educate. Even after years of filing, many people are still unaware of most key deductions as well as many of the most common tax rules. While the majority know how to remain on the right side of tax law, many employees miss out on dozens of perfectly legal, tax-saving strategies simply because they don’t know they exist or they incorrectly think these strategies are illegal. You can help by sending trusted resources and tips. For example, a way to save on taxes could be through HSA’s tax benefits. Plus, you can even pre-schedule follow-up tips after Tax Season to keep your employees engaged and thinking of their finances ahead of time.
5. Remind them not to leave money on the table. Your employee could benefit from the Earned Income Tax Credit (EITC), a benefit for working people with low to moderate-income, particularly those with children. Only about 78 percent of people who are eligible for EITC actually utilize it, so if they are eligible let them know so they don’t miss out.
6. Show them you’re here to help. If you haven’t already, schedule a meeting (or Lunch & Learn) with your team to talk about tax season and/or hold tax season office hours. Everyone’s in the same boat and needs to file taxes. Remind your employees that you are a resource if they have any questions.
7. After filing… share this list to encourage your employees to:

• Revisit deductions to make sure they’re correct and prepare for the rest of the year (or for filing next year)
• Set savings goals
• Set up deductions/auto savings
• Set up direct deposit
• Open an account for their kid(s) or family member(s)
• Prioritize emergency savings. Stash away $400 from their refund this year. With everyone’s collective effort, we can move the needle and increase savings across the country.

Remember, over-communication is better than under-communication.

Remind your employees you’re there for them and are thinking of their well-being. They’ll appreciate the extra effort. As we see time and time again with our clients, helping employees build smart habits with their finances pays off in the long run.

TrustPlus is now offering our financial coaching services for free for the rest of the year to small businesses and their workers, as well as providing critical resources to protect workers and families impacted financially by COVID-19. Learn more about our relief efforts.