Employees lose over 1 day a week to financial stress. Employees lose over 1 day a week to financial stress.

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How HR Can Support Employees During Tax Season

Daniel Lee, CFA, CFP®

Tax season can be a stressful time for employees, especially when factors such as starting a new job or selling company stock come into play. While HR teams are eager to support employees in navigating complex tax concerns, they often don’t want to toe the line of providing tax advice.


How to Support Employees During Tax Season

Here are some ways employers can support their employees during tax season:


Communicate Early and Often

W-2s are due by January 31 each year. This is also a good time to send reminders, helpful explanations and resources that may be available to employees to help them prepare their taxes. You should also remind employees to update their tax withholding to help ensure the correct amount of taxes are taken out throughout the year. This is particularly important following major life events such as marriage or children.


Host Educational Sessions

Tax planning is an important step on an employee’s path to financial wellness. Provide employees with access to education and information sessions on tax planning, including strategies for reducing their taxable income. Consider hosting lunch-and-learns and directing employees to other resources that are available to them, such as tax planning guides and relevant educational materials in the BrightPlan Academy.


Address Equity Compensation Questions

Questions about the tax implications of equity compensation are among the most common questions our financial planners receive. Given the complexities surrounding the topic, provide employees with resources on how taxes are determined for restricted stock units (RSUs) and employee stock purchase plans (ESPPs). Additionally, when stock vests, it’s often standard for employers to apply the minimum required distribution of 22%. Consider providing employees with the option to withhold more than the minimum. This is particularly pertinent to higher income employees who don't want to owe taxes later on. 


Provide Discounts on Tax Services

Employers can help offset the costs of tax preparation services by providing employees with a discount on professional tax services. However, some employees may not have complicated tax situations or don’t have the means to pay a tax professional to file their taxes for them. For employees that prefer a more hands-on approach, consider offering discounts for do-it-yourself tax preparation services, such as TurboTax and H&R Block.


Let Employees Know About Free Services

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.


Offer Resources for Underserved Populations

There are a number of tax credits available to certain employee populations, 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.


Tax season can be a stressful time for employees. Help make it a little easier by providing employees with the education and support they need to manage their taxes with ease.