Nobody enjoys taxes. As an employer, you can offer several options to your employees that can allow them to reduce their taxes. This can serve as an incentive to attract high-quality candidates when you’re hiring and is a benefit that can help you keep employees for a long period of time.
Introduce a Retirement Plan
There are many kinds of different retirement plans that you can offer employees. One of the most common is a 401(k). That’s when you match contributions toward retirement savings that an employee makes out of their paycheck, capped at a low percentage of that paycheck (usually somewhere around five percent).
Retirement savings plans are a popular benefit that a lot of employees look for. When you fill out your tax paperwork, you can claim the retirement savings contribution to receive a tax credit. While your exact savings will depend on your tax bracket, it will certainly help out no matter where you are economically.
Offer an FSA
An FSA (flexible savings account) is another possible benefit that a lot of your employees will probably want to utilize. They are most often used for medical savings, although there are other possibilities as well. Employees don’t pay taxes on the money that goes into their FSA. The more they put into it, the more they will save on taxes.
You, as the employer, will also be able to avoid a payroll tax from the IRS. Overall, it’s always a good thing to save up for a possible medical emergency, so most people should probably be looking to have an FSA anyways.
When you pay employees on a salary, that means there are certain tax advantages that can be applied to them that cannot be applied to the hourly wage worker. Two examples are leave travel allowance (LTA) and house rent allowance (HRA). The former provides a tax break relating to travel costs for dependents, such as children or family. The latter provides tax breaks if the salaried individual resides in a rented property. If you employ any salaried individuals, you should make sure you know the kind of tax breaks they might be entitled to.
Employees will be grateful if they know that you’re putting in the effort to make sure that they receive the benefits that they deserve. You will not only improve their lives but also improve the culture of your company. Benefits often make the difference between a mediocre work environment and an exceptional one.
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