Easy-to-Use Tax Withholding Calculator 2021

Easy-to-Use Tax Withholding Calculator 2021

Employers, have you reminded your employees to check that they are having the right amount of tax withheld from their paychecks? It’s a good idea for everyone to check their payroll withholding every year, but it is particularly important this year due to the many proposed tax changes.

The law’s changes do not affect every taxpayer the same way. Some workers may need to increase their withholding so they will not face a tax bill —and possible penalties — next April when their 2021 tax return is due. Many other workers, however, benefit from the law’s changes and can take home more pay because the withholding amounts are less.

Help your employees avoid being surprised next spring when they prepare their 2021 returns. Remind them now to check their year-to-date withholding so they can make adjustments, if appropriate, on their paychecks for the rest of this year. It’s easy and convenient using tools provided by the IRS.

Here is a sample message to employees:
The IRS encourages everyone to use the Withholding Calculator to perform a quick “paycheck checkup.”  This is even more important this year because of recent changes to the tax law for 2021.
The Calculator helps you identify your tax withholding to make sure you have the right amount of tax withheld from your paycheck at work. Use the Calculator to see if you should give your employer a new Form W-4, Employee’s Withholding Allowance Certificate, to adjust your income tax withholding going forward.
To get started, gather your most recent pay stubs and a copy of your last federal tax return (2020 Form 1040). You’ll use the information to estimate your 2021 income and taxes.
The Withholding Calculator does not ask you to provide sensitive personally-identifiable information like your name, Social Security number, address, or bank account numbers. The IRS does not save or record the information you enter on the Calculator.
Ready to start? Make sure Javascript is enabled and go to: Withholding Calculator

by Kathleen Berger
Originally posted on thinkhr.com

The Great Resignation

The Great Resignation

The employment market has taken the American worker on a roller coaster ride over the last year and a half. Unemployment rates hit record highs in 2020 with the spread of the coronavirus (COVID-19) pandemic. Nearly a year later, the Job Openings and Labor Turnover Survey reports new jobs have increased to “a record 9.3 million, as the economy rapidly recovered from its pandemic depths.” To add another piece to the employment puzzle, nearly 4 million workers quit their jobs in the same month, coining the term “the great resignation.” What caused this dramatic exit? Many employees were spurred to reflect on their priorities during the pandemic and identified more free time as a key factor in their employment future.

As the pandemic spread last year, workers were forced to make arrangements of all types. Those on a temporary hiatus from the office scrambled to adjust to a work-from-home setup. Others who were laid off were pushed to conduct job searches in a market where jobs were few and far between. Additionally, families were pressed to juggle childcare and remote school arrangements with little to no warning. The changes were big and hard, but between all the hustle and bustle workers adjusted to this “new normal.” During that transition, many evaluated their prior work-life balance – more specifically, what was working and what was not. COVID-culture put priorities into perspective for many.

Americans experienced burnout at record levels during this stressful time and many came out of this period with a newfound respect for putting their mental health first. As “return to office” notifications landed in inboxes, many decided they were not willing to return to the office full time. A study conducted by Prudential, a global insurance and financial services firm, concluded that approximately 33% of Americans are disinclined to work for employers that aren’t offering remote work for a portion of their week. This introspection helped many workers see that their priorities needed to be rebalanced. Many wanted to spend less time commuting and working in the office, and more time on personal interests and with loved ones. This “aha” moment, coupled with a resurgence of new jobs in the market, led many to feel a newfound sense of confidence in finding a new opportunity. And that resulted in a dramatic shift in the number of employees choosing to leave their jobs, feeling they would find roles with more flexible work hours and supportive work environments.

There is no doubt we will continue to see fluctuations as our economy responds to this newly resurgent employee market. Employers can be proactive in retaining employees who may be evaluating their current work-life balance. Managers and Human Resource staff can engage with employees early and often. Don’t wait for your employees to raise a concern about workplace flexibility – lead the charge by looking into what your company can do to support this interest.

©2021 United Benefit Advisors, LLC. All rights reserved.

Cash in Lieu of Benefits Program

Cash in Lieu of Benefits Program

Many employees have the option to choose between their employer’s plan and another program where they meet the eligibility requirements (i.e., spouse’s, domestic partner’s, or parent’s plan). A Cash in Lieu of Benefits program, or cash-out option, offers an incentive for those employees to waive the employer coverage and instead enroll in the other plan. The incentive is in the form of a cash payment added to their paycheck. Properly implementing a Cash in Lieu of Benefits program is crucial, as unexpected tax consequences could occur otherwise.


The Internal Revenue Service (IRS) requires a Section 125 plan be in place to be a qualified cash-out option. If the plan is not set up under an IRC Section 125 plan, the plan will be disqualified and employees who elect coverage under the health plan will be taxed on an amount equal to the amount of cash they could have received for waiving coverage.

The IRS has ruled that when an option is available to either elect the health plan, or to receive a cash-out incentive, then the premium payment to the insurance company becomes wages. The reasoning is that when an employer makes payments to the insurance company where the employee has the option of receiving those amounts as wages, the employee is merely assigning future income (cash compensation) for consideration (health insurance coverage). Therefore, the payment is treated as a substitute for the health insurance coverage. By setting up an IRC Section 125 plan, the employer is offering a choice between cash and certain excludable employer-provided benefits, without adverse tax implications.

Plan Set-up

There must be a Plan Document in place and nondiscrimination requirements must be followed, including annual nondiscrimination testing, in order to be a qualified Section 125 plan. To meet nondiscrimination rules, Cash in Lieu of Benefits must be offered to all employees equitably. To be sure an employer is not over incentivizing employees to drop the plan, which could impact the nondiscrimination participation requirements, the monthly cash benefit should not exceed $200-$300.

When a Section 125 plan already exists (Premium Payment Plan, Health Care Spending Account, Dependent Care Spending Account), the plan can be amended to add the cash out feature. Where no Section 125 plan is in place, it is standard to have an attorney provide this service. It is important to note that, although the Section 125 plan protects the employees electing coverage from taxation, the cash-out incentive is an after-tax benefit.

As always with any IRS-qualified plan, proper documentation is essential. An employee should only be allowed to waive coverage when there is another plan available, and proof of enrollment is provided. If there is a subsequent loss of that coverage, HIPAA Special Enrollment Rights will allow entry onto the plan, and the cash-out incentive will cease.


Cash in Lieu of Benefits funds cannot be used to purchase individual health coverage. For companies over 20 lives and Medicare is secondary coverage, the plan should not be structured to incentivize employees over 65 to opt out of the employer plan to enroll in Medicare.

Another factor to consider is the impact to employers considered Applicable Large Employers (ALE) and subject to the affordability determination and reporting under the Affordable Care Act (ACA). An ALE is an employer averaging 50 or more full-time plus full-time equivalent employees for the preceding 12 months. If a cash out option is offered without an IRS qualified Cash in Lieu of Benefits plan, the payment must be included in the affordability calculation.

There are also Fair Labor Standards Act (FLSA) implications. Any opt-out payments made by an employer to an employee must be included in an employee’s regular rate of pay and therefore is used in calculating overtime compensation for non-exempt employees.

These considerations should be reviewed with a tax expert and/or ERISA attorney to determine if a Cash in Lieu of Benefits program is the right option for your organization. These professionals, along with a Section 125 Plan Administrator, can provide the necessary guidance to ensure the program will satisfy compliance requirements. For further information on this topic, please contact your Johnson & Dugan team.

By Jody Lee, Johnson & Dugan

Data Drop: D&I Appetite, Mental Health Struggles and the Expanding Gig Economy

Data Drop: D&I Appetite, Mental Health Struggles and the Expanding Gig Economy

There are certain issues that have taken center stage in the collective conscious when talking about the workplace, the future of work and how the current workforce is faring under the current conditions. Naturally, as those things enter the collective conscious, researchers find themselves asking what exactly holds true and what can we learn from it?

As usual, my inbox is full of the latest studies and surveys being conducted by HR vendors, researchers and employers of all sizes. In today’s data drop, we’re going to take a closer look at how employees view diversity and inclusion efforts, what challenges they’re facing when it comes to mental health and the impact the gig economy is having.

The D&I Appetite

At this point, there should be little doubt around the importance of D&I or DEI in your organization. It’s been well established the impact it has on the bottom line and employer brands, but if you needed more reassurance, the latest study from Boston Consulting Group should hammer it home.

The study asked questions of more than 200,000 employees across 190 countries and the results shouldn’t come as a surprise to anyone who’s been following sentiments around DEI over the last year. Results included the following:

  • More than half (51%) of U.S. respondents said they would exclude a company from their job search if its values and stance on diversity and inclusion (D&I) didn’t match their own beliefs. This number was even higher among respondents 30 years and younger (56%).
  • D&I became more important over the last year across all age groups globally. In the U.S., respondents 30 years and younger (72%) were most likely to agree with this statement compared to all U.S. respondents (63%) and all respondents globally (69%).

It’s a notable sentiment following the release of research by diversity platform Headstart as part of its “Discrimination in American Hiring” report. The findings show that 54% of those seeking a new job in the last two years felt they were frequently discriminated against. That number rose to 66% for Black Americans and 83% for those who identify as gender-diverse. Interestingly, however, 30% of respondents who faced recruitment discrimination would consider reapplying for the same company.

Mental Health Struggles

In June of last year, the Centers for Disease Control and Prevention (CDC) released data which showed that 40% of Americans were struggling with mental health. That number hasn’t decreased as the pandemic has continued and the months that followed included a hectic election and numerous other crises.

A more recent report from The Standard, an Oregon based insurance company, showed that 55% of workers surveyed said that a mental health issue had affected them more since the pandemic began. MetLife’s annual Employee Benefits Trends Study backs this up, with 54% saying mental health has been their biggest concern during the pandemic.

This won’t come as a surprise to HR teams that have been working toward developing mental health support tools for their workforces, but it should also be extended to talent teams as they consider their hiring processes.

Among the unemployed, one in five are or have been treated for depression in the last year. Many suffer from sleep loss and high levels of stress that can impact their ability to search and interview for a new job. Long term unemployment can lead to serious health issues such as obesity and other conditions related to stress and inactive lifestyle.

Expanding Gig Economy

Globally the gig economy has seen a boom as layoffs and needs for flexible scheduling have seen more people around the world adopt gig work than ever before. In the U.S., around 40% of Americans are currently working in gig or contract roles.

Job boards are now seeing a stark rise in contract job postings, with Resume-Library noting a 58% increase in the demand for handyman roles month over month. While many think of rideshare drivers and freelancer graphic artists when they think of gig work, the top five gig postings on the site now include the following:

  • Handyman +58.3%
  • Market Researcher +50%
  • Packer +20.3%
  • Social Media +4.5%
  • Photographer +4.3%

The U.S. is currently the fastest growing freelance market in the world, experiencing a 78% growth in gig positions over the last year, with the UK following behind at 59% and Brazil at 48%.

By David Rice

Originally posted on ThinkHR

The Fundamentals of Performance Management

The Fundamentals of Performance Management

The right performance management process for your organization depends in large part on what you want to accomplish with it and what you’re willing to invest in it. Here are some principles to keep in mind when deciding on your policy and performing assessments:

  • Performance reviews are often stressful and difficult because the employees don’t know how they’ll be evaluated and they’re worried they’ll be surprised with a bad review. But reviews, however often they’re done, shouldn’t be a surprise. If you give employees regular feedback on their performance and address poor performance when it happens, then the review becomes more of a reminder and summary of what employees are doing well and where they have opportunities to improve.
  • Setting clear performance expectations and holding employees accountable to them improves efficiency and productivity. It also improves morale. Conversations with an underperforming employee may be challenging, but allowing poor performance to continue unabated can cause widespread frustration and resentment from coworkers whose work is affected by it. Ignoring poor performance only compounds the problem.
  • Employees are more likely to take ownership over their performance goals if they have a role in defining those goals.
  • Connecting performance measures to company objectives and values can increase employees’ sense of purpose and engagement by drawing a direct correlation between their individual work and performance and your collective success as a company.
  • It’s helpful to structure performance evaluation meetings and conversations around the specific expectations set in the job description to ensure that the discussion is directly applicable to that employee’s particular job duties.
  • Documenting performance evaluations can help you justify pay increases, decreases, or other employment decisions like termination that could be challenged as discriminatory. It’s safest to terminate an employee when you have documentation that justifies the legitimate business reasons for the termination.

By Kyle Cupp

Originally posted on Mineral.com
Exploring Mental Health Benefits

Exploring Mental Health Benefits

The overall well-being of an employee has never been more of a priority for employers as it is right now. From health care to vision care to mental health care, the entirety of the employee’s health is important to the health of the organization.

Importance of Mental Health Benefits

Mental health and the cost of not treating its issues has far-reaching effects from the individual to the global world.

  • If left untreated, an employee’s poor mental health could lead to work related accidents, absenteeism, poor workplace productivity, and even workplace violence.
  • Mental health costs make up about 8% of the US’s total healthcare spending.
  • The National Institute on Mental Health estimates that major mental illness costs the US at least $193 billion per year in lost earnings.
  • Globally, depression and anxiety issues cost about $1 trillion a year.

Types of Mental Health Benefits

Mental health benefits can look different for each organization. Universally, businesses offer some sort of Employee Assistance Program (EAP) to its members. EAPs include services that are typically delivered online or by telephone. Services may include alcohol and substance abuse counseling, legal aid, and health and wellness counseling. These services are offered to the employee free of charge and are done anonymously.

As an extension of basic health care benefits, mental health benefits can also include one-on-one counseling with a licensed counselor for a certain number of sessions.  Mental health benefits may also incorporate wellness programs like relaxation and meditation classes, sleep techniques, and stress management lessons. Check your health insurance benefits package details as you may find mental health insurance coverage included under the behavioral health section.

During open enrollment, when employers present the employees with the upcoming year’s health insurance plans, the employee should also ask about mental healthcare options. Just as you assess the different healthcare plans and what fits best for you and your family, you can also assess the costs and coverage of mental health plans. Also, find out if your company offers a Flexible Spending Account as you can use that pre-tax money to pay for out-of-pocket mental health service costs.

Now, more than ever, people are more aware of the benefits to good mental health and how it affects their overall health and work performance.  Utilize the company sponsored EAP offerings and investigate the details of your health insurance plan to find out what mental health services are covered. Your overall health and well-being are important and so are you!