One of the biggest challenges your clients face is how to offer a competitive benefits package while being mindful of their budgets. Most of the time, they’re focusing on benefits that have upfront savings; while that’s not necessarily a bad strategy, doing so overlooks an important opportunity.
Some benefits help employers save on taxes, which is a great strategy for your clients to protect their bottom line while providing value to their employees. With taxes being top of mind this time of year, now is a good time to engage clients with conversations about benefits that can help save on taxes.
Here are some benefits to suggest:
1. Dependent care assistance
Contributions to benefits that help caregivers, such as Dependent Care Accounts, are exempt up to $5,000 annually.
2. HSAs
Employer contributions to HSAs are exempt up to the annual dollar limit. For the calendar year 2021, individuals can contribute up to $3,600 and the family contribution limit is $7,200.
This can open the door for a great conversation about the value of offering a high-deductible health plan paired with an HSA for saving your clients money while providing a way for employees to cover health expenses and save for the future.
3. Group term life insurance
Group term life insurance is an opportunity for your clients to get a decent tax break from a single benefit. For coverage of employees, up to $50,000 is exempt, while coverage for a spouse/dependent is exempt up to $2,000.
4. Qualified retirement plans
Investing in a retirement plan is one of the best opportunities for your clients to save on their taxes. Employer contributions are exempt from FICA. Other retirement planning services may also be exempt from FICA -- work with your individual clients to assess their specific situation as certain benefits like tax return preparation costs are not exempt.
5. Tax-savings
Your clients can save on their taxes by offering educational assistance to their employees, even if it’s not directly related to their job function. If the education is job-related, there’s no dollar limit on the amount that’s exempt; however, non-job related assistance is exempt up to $5,250. You can talk with your clients to weigh the pros and cons of offering educational assistance as it will vary according to company size, industry and job functions.
6. Meals, lodging, moving, equipment, de minimis fringe benefits, and other miscellaneous benefits
There are a number of smaller benefits that can add up to save your clients on their taxes. When providing equipment like cell phones or reimbursing for costs related to lodging, moving, transportation, meals and more, they are often exempt so long as they are directly related to job function. Be sure to ask clients thorough questions about even the smallest perks they offer to provide the most opportunity for savings.
It’s important as a broker to get creative with your clients to find strategies that maximize both their tax benefits and value to employees. Shedding light on tax saving benefits is a great opportunity to do so.
You can find more information about many of the benefits discussed here, along with others, on our website and through our experienced broker representatives. Contact us today to learn more.
Sources:
https://www.paychex.com/articles/employee-benefits/benefits-that-save-you-taxes
