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Many Want Tax Preparation Support from Employers

By Stephen Miller  5/12/2006
 

When it comes to understanding their income tax options, nearly one-fifth (18 percent) of employees do not fully comprehend how their W-4 tax-withholding forms impact their taxes and paychecks, according to a national survey conducted during the 2005 tax season by Hudson, a staffing and outsourcing firm. That figure rises to 29 percent when looking at workers aged 18-29 years old.

Additionally, two in every five U.S. workers (40 percent) would be interested in a tax preparation support program from their employer if it were offered.

The survey also found that:

    • Only one-third (34 percent) of workers prepare their own taxes, while 55 percent hire a professional such as a CPA or a tax preparation firm.

    • Older workers and entrepreneurs are more likely than the rest of the workforce to hire a CPA to do their taxes.

Among those who look to outside resources for help, seven in 10 hire a CPA while the remainder choose tax preparation firms.

"The survey emphasizes the need for educating employees—especially those new to the workforce—on the subject of taxes and their implications," says Brendan Flood, chief financial officer and chief operating officer, Hudson North America. "As their careers progress and tax preparations likely become more complex, employees also stand to benefit from additional training, ideally as part of a program covering financial and retirement planning."

Percentage of workers who…

All workers

Ages 18-29

Ages 40-49

Ages 65+

Entrepreneur/
self-employed

Employed by private company

Filed by mid-March

47%

62%

37%

29%

34%

52%

Prepare own taxes

34%

32%

37%

31%

25%

36%

Use a CPA

38%

27%

41%

49%

50%

33%

Do not understand their W-4 (income tax withholding) form

18%

29%

14%

18%

13%

21%

Source: Hudson

The Hudson taxes survey, based on a national poll of 1,890 U.S. workers, was compiled by Rasmussen Reports, LLC, an independent research firm.

Tax Prep Firms Offer Programs for Employers

To the extent that U.S. employers offer tax planning and preparation as an employee benefit, these services are often focused on expatriate employees working outside the United States or as a perk within the executive compensation packages of the highest earners.

However in 2000 H&R Block, the largest U.S. tax preparation services firm, introduced H&R Block Employer Solutions as way for companies to offer Block's tax preparation service as an employee benefit. In its basic form, the program gives employers promotional and employee-enrollment materials tailored to their firms. At tax time, Block preparers put together the tax returns of enrolled employees.

Jackson Hewitt Tax Services, the second largest U.S. tax preparation services company, also offers an employee benefits program that allows companies to provide their employees with tax preparation discounts—a benefit that Jackson Hewitt says now covers 4 million employees. Companies that participate in the Jackson Hewitt discount program range from Burger King to Lockheed Martin.

In addition, TurboTax, a leading tax preparation software provider, also has a robust employer program that offers employee discounts on TurboTax products, along with articles and calculators to help employees to manage their financial lives—including information on how their W-4s impact paychecks and taxes. The TurboTax program is offered to employers at no charge, with enrollment is via a short online form.

Stephen Miller is the editor/manager of SHRM Online's Compensation & Benefits content areas.

Related SHRM Article:
Tax Preparation as an Employee Benefit, SHRM Online Benefits, re-reviewed January 2014

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