The Planner

Tax Reform Spurs Employers to Revisit Employee Compensation

Scroll down to see more
Arrow down button
The Planner illustration graphic
Close popup button
May 25, 2018
Core Group
Tax Advice
Tax Reform Spurs Employers to Revisit Employee Compensation

Many small business employers are rethinking their employee’s compensation in light of the recent tax reform.  Certain industries, like transportation, will be hit harder than others.  Be proactive and review your policies so that your employees don’t suffer a shock come tax time.

What Changed

There were many significant changes with the recent tax reform for Small Businesses.  Click here to read more.  But one big change has a potentially devastating impact on your employees.  Miscellaneous Deductions subject to the 2% of AGI floor were removed for tax years 2018 through 2025.  One of the most common of the expenses that fall under this category is unreimbursed employee expenses.  Typically this includes things like uniforms, tools, and other items required for the job, but paid for by the employee.

Travel expenses, including mileage and per diem for overnight travel add up quickly.  Many industries (e.g. trucking/transportation) and types of employees (e.g. sales) have large deductions on their personal returns for these items.  Reaching several thousand dollars in some cases, some employees are going to face a surprise when they receive their tax refund.

The offset Congress put in the law was to increase the standard deduction, which will help some employees, but not all.

What to Do

Some employers are revisiting their reimbursement policies to include items not previously paid.  Alternatively, you can at least let the employees know about the change and advise them to recalculate their tax withholding on their paychecks.  The point is you need to do something, don’t just let it go and have some potentially very upset employees who might blame you for their misfortune.  Look at your industry groups for guidance on what others in your space are doing around the country.  Make sure you’re keeping up with your competition. You don’t want to end up with a competitive disadvantage because of the tax law!

Now is an ideal time to revisit your employees compensation and benefits.  We at Core handle all of your employee related items from payroll to benefits, timekeeping to worker’s compensation.  Schedule a call to see how we can help you keep satisfied employees.

Ask Us a Question
Seems like no one has asked a question yet. Be the first one to do so by filling the form below
Thank you for engaging with us!
We’ll review your question and notify you as soon as we post our answer as quickly as possible. If you have any other questions, you can reach us at your earliest convenience
Oops! Something went wrong while submitting the form.
More Related Content
We couldn't find any related content.
Corey using his computer

Ready to make more money and keep more of it?

Each day you tell yourself you’ll get to this “one day” you are throwing money out the window. You risk getting to a point where you want to exit or retire, but you aren’t able to. The growth of your business, and your ideal outcome for your future depend on setting this up now.

Schedule Free Consultation
Contact Us
We respect your Privacy. The information you provide will be used to answer your question or to schedule an appointment if requested.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Close popup button