- Understand personalized tax needs. Regardless of background, there are several ways employers can help employees during tax season.
- Provide resources. Representation, tax credits and industry connections are key to helping employees get the tax help they need.
- Help employees maximize their return. Offering resources and tax credits earlier in the year will result in more benefits for everyone.
Tax season can be particularly stressful for employees with limited access to tax planning resources. Whether it’s unexpectedly owing money or understanding tax credits, employees appreciate the assistance navigating a complex system amid evolving personalized tax needs.
As the April 18 deadline approaches, there are several ways employers can support employees from all backgrounds during tax season.
Representation in Services
According to Harvard Business Review, a team with a member who shares a client’s ethnicity is 152% more likely than another team to understand that client. Clearly, representation matters, highlighting the importance of having a service provider with a similar background. When it comes to supporting women and people of color during tax season, employers can help match employees with accountants of similar backgrounds.
Tax Filing for Non-Residents
The U.S. tax system is confusing, but it can be even more daunting for new foreign workers. A limited number of accountants have international tax expertise, and when they do specialize in this area, they are often very expensive. Employers that sponsor workers from other countries can help by offering to cover the cost of tax filing for the employee’s first two years.
Connect Lower-Income Workers to Specialized Accountants
Many accountants are used to working with higher net-worth individuals and may be unfamiliar with tax credits and other support available to lower income individuals. Consider helping employees maximize their tax return by connecting them to accountants that specialize in their financial situation.
Keep Other Tax Credits in Mind
There are a number of tax credits available to marginalized groups, including credits specifically for employees who are disabled, low or moderate income wage earners, and those who are providing care for a child or other dependent. For example, there’s a saver’s credit for lower income workers who contribute to a qualified retirement account. There’s also the earned income tax credit (EITC) that provides qualified taxpayers as much as $6,728 in tax credits in 2021. Educating employees on the most common types of tax credits can help reduce their overall tax liability.
Let employees know about the free tax filing services that may be available to them. The IRS Free File service is a partnership between the IRS and tax software providers that lets anyone who earned less than $73,000 in 2021 prepare and electronically file a federal return at no cost.
Along with the Free File service, many employees are eligible for free tax help from trained volunteers at community sites around the country. The Volunteer Income Tax Assistance (VITA) program offers free tax help to people who make $54,000 or less, persons with disabilities, the elderly and limited English speaking taxpayers who need assistance in preparing their own tax returns. IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals.
Non-resident workers, lower income employees, and individuals who are eligible for tax credits should start on their taxes early. Employers can help relieve some of the financial stress of tax season by providing these employees with resources to help them maximize their tax return.