Tool Reimbursement is a Win - Win for both the employer and the employee. The program is administered by an independent 3rd party that fulfills the requirements for an accountable plan under the Section 62(c) benefits tax code.
Take Home More Money
By receiving a completely "tax free" for the use of your tools plus a check from your employer, the combined net pay is greater than before. You also reduce your taxable income level as well which may also add to more savings.
How Much is Tax Free?
The amount of your tool reimbursement is based on the inventory of tools you use on the job, and other expenses that you may be required to incur for performing your job.
The maximum allowable tool rate reimbursement is $5.75 per hour (California $6.75), and not to exceed one-third their gross wage. So if you work 50 hours in a week, and qualify for the maximum rate, then you will have a gross tool reimbursement of $287.50.
From this total tool reimbursement an administrative fee is deducted and the check is sent to you or directly deposited into your bank account.
The below net increase in pay example shows the maximum tool benefit rate of $5.75 for 52 weeks, working 40 hours per week, and after the administrative rate is deducted.
You can increase their yearly net earnings by $1,000-$3,000!
Allegiant provides a two day turn around for tool reimbursement payments. You can elect to have their tool reimbursement automatically deposited or receive an actual check.
How to Qualify
One of the first steps required is to have you complete a tool inventory, employee information survey, and a direct deposit form (if desired). These forms will determine the rate of reimbursement that you are entitled. This may vary, but generally a journeyman metal technician or mechanic will qualify for the maximum, if they have the typical tools required to perform their job.
Even as an apprentice with minimal tools you can benefit with the tool reimbursement program. As you purchase tools in the future, your tool reimbursement rate will increase as well.
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