BYOD Management Services: The Definitive Guide to BYOD Taxes 
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BYOD Management Services: The Definitive Guide to BYOD Taxes 

Headshot of a woman By Jennifer Warren January 23, 2024

Categories: Bring Your Own Mobile Workforce

With the continuation of remote work, many companies have grown or put into place Mobile Workforce programs that simply didn’t exist before. Businesses and employees need policies to support remote work and Bring-Your-Own-Device programs. But is it cost effective? What about the legal and tax implications associated with personal device reimbursement? Should BYOD management services be kept in-house or outsourced? With the rising demand for BYO in the current business landscape, it’s vital that finance leaders understand the tax implications of reimbursement programs and how they impact their bottom line. 

How do you reimburse for BYOD?

Growing legislation requires companies to reimburse for personal tools used for business purposes, such as devices and home internet. Many states have laws in place to prevent companies from benefiting from employee-owned assets used for business growth and productivity. To ensure compliance, companies must fairly reimburse employees for the business use of these devices. There are a couple ways companies typically do this. 

A Flat Stipend

One approach to BYOD management services is to provide employees with a flat stipend to cover the costs of their personal devices. Flat stipends simplify the reimbursement process by allocating a set amount to each employee for the use of their device. However, these stipends are traditionally taxed and not “flat” on either side – costing companies and employees valuable dollars from their bottom line. 

Flat stipends are typically dispersed through company payroll, and thus taxed accordingly. For example, employee stipends are taxed 7.65% FICA on both the giving and receiving end, while also being subject to traditional income tax. This means the company is paying out more than the original stipend, while the employee nets much less. 

Expense Reporting

Another option for reimbursement is employee-driven expense reporting. With this method, employees report their associated device costs and phone bills through traditional expense reports processed internally. This is often done to avoid corporate tax implications by ensuring the reports substantiate the reimbursement. However, this method creates high administrative burden and often results in employer overpayment (for example, paying the employee’s entire phone bill).  

Outsourced BYOD Management Services

Both flat stipend and traditional expense reporting leave a lot to be desired. When considering reimbursement options, outsourcing BYOD programs to BYOD management service providers benefit both the employer and the employee by improving compliance, decreasing administrative burden and ensuring fair and equitable reimbursements. Outsourced programs can also: 

  • Eliminate tax waste by restructuring reimbursements to provide equal or higher reimbursements to employees with little to no out of pocket cost to the employer  
  • Customize role-based reimbursements based on reasonable business use parameters and consumer cost data for both mobile device hardware and wireless rate plans, ensuring fair and equitable payouts 
  • Reduce administrative burden while increasing scalability through automation 
  • Create a better end user experience by giving employees freedom of choice while maintaining fair cost categories 

Interested in learning more about how outsourced BYOD management services can save your bottom line while increasing employee experience and satisfaction? Find out if BYO could be the right fit for your company in our resources center!

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