How to Help Your Employees Get Through Tax Season
Mar 20, 2019
Tax season is upon us, and this year you may need to be prepared for your employees to come knocking on your door in a panic. This is the first year that people will be seeing the full impact of the new tax law that went into effect last year. Many people – your employees included—are anxiously preparing their tax returns to determine if they will wind up owing money or getting an anemic return, if one at all.
Many people consider their tax refund as a financial lifeline. Yet, this year on average, Americans will receive a tax refund of $2,640, 16% lower than last year. Make no mistake, these smaller refunds will impact their finances in a big way. They count on it to pay off debt, boost their savings or to pay bills that have been piling up. For those who will owe money this year, it will be an even harder financial pill to swallow.
As an employer, it is important to understand how your employees personal financial lives impact your business. Employees are already driven to distraction because of financial stress. As one example, employees spend 100 hours on personal financial matters while at work per year, on average. That’s 100 hours that they spending on something other than the work you need them to complete. The uncertainty surrounding their taxes this year will only magnify the issue.
Whatever the case may be for your employees, you will need to be prepared to assist them. So what can you do to help your employees?
- Be prepared. Don’t be surprised if more employees than usual line up outside of Human Resources armed with questions, raising concerns and venting about their tax refund – or lack of.
- Review their withholdings with them to make sure they have selected the correct number of withholdings that aligns with their goals and expectations. Remind them that they will start seeing changes in their next paycheck.
Provide some practical guidance to help them navigate their finances:
- Remind them to create an emergency savings. You can encourage them to use any tax refund they do get, no matter how small the amount, to jump start the process.
- Encourage them to pay off debt – Paying off loans early can reduce the interest your employee is paying over the lifetime of a loan and will free up that money for other uses like saving.
- Suggest that they boost their retirement savings – Your employee may love their job and your company, but they are probably dreaming of retirement. Help them make retirement a possibility by encouraging them to put some of their refund towards a retirement savings account.
Remember, financial stress has a measurable – and negative – impact on your employees and their productivity. Helping them improve their financial health is good for business.
Financial wellness is a year-round effort that needs to be a priority for any employer. Discover how LifeCents can help you cultivate a culture of financial well-being for your employees. Schedule a demo of LifeCents today. Contact us at firstname.lastname@example.org.