Though we are a small business, we have had to battle with the stress of filing health care reports for our larger client. Here is some information from http://bit.ly/1TZMNVk we believe might be useful for large employers as they try to wrap up 2015 taxes.
NEW YORK (AP) – As more requirements are demanded by the health care law take effect, income tax filing season has become complicated for small businesses. Firms that have to offer health insurance have more forms to complete giving details of their coverage. Business owners whose payrolls have lingered close to the threshold where insurance is mandatory need to make sure their coverage — if it was offered last year — was enough to avoid penalties.
Even tax-savvy owners might find that do-it-yourself does not work when trying to fulfill the law’s requirements. A lot of owners don’t know the intricacies of the new regulations associated with the health care law that affect employers, said Lydia Glatz, an accountant with the firm MBAF in Fort Lauderdale, Florida. Here are some issues in association to the health care law that small businesses should be aware of.
How many employees do you currently have?
Companies that had 100 or more employees were required to offer affordable health insurance to workers and their dependents, but not their spouses, starting in 2015. Companies with 50 to 99 workers have to offer coverage starting this year; firms with under 50 employees are exempt.
Owners who were supposed to pay for affordable insurance last year but didn’t provide it may face thousands of dollars in penalties — $2,000 per employee each year, except for the first 80 employees for the 2015 tax year, but including the first 30 for 2016. So it’s paramount for them to know what their worker count was — and many might not know the calculations are based on their 2014 payroll, not 2015.
Here’s where it gets complicated…
Part-time workers and fired employees during the year can be counted toward the threshold where coverage is needed. Some seasonal workers count too. Part-timers who work fewer than 30 hours a week under the health care law must be counted toward what is called full-time equivalent workers. For example, if a company has two people who each work an average 15 hours a week, it would count as one full-time equivalent employee working 30 hours. A firm with 30 full-timers and 40 part-timers who average 15 hours a week each has 50 full-time equivalent workers and has to offer insurance.
“The concept could potentially catapult what one believes to be a small business into a (large one),” Glatz says. Note: owners with multiple companies that combined have 50 or more workers might have to offer insurance, even if each of the individual firms has fewer than 50.
New tax forms.
Starting in 2016, businesses required to comply with the health care law must fill out forms that detail the cost of coverage and the names and Social Security numbers of workers and their dependents. The government uses the information to figure out whether a firm provided coverage that was affordable under the law, or if it must pay a penalty.
The IRS recognizes the forms’ complexity and has extended the deadline for them to be filed. Forms 1095-B and 1095-C, which must be given to employees, are now due March 31. Forms 1094-B and 1094-C, which are required to be filed with the IRS, are due by May 31 if submitted on paper, and June 30 if filed online.
Well-intentioned but not legal.
Some employers with fewer than 50 workers and who don’t offer insurance have tried to help workers with the costs of coverage by giving them money for their premiums, with the intention that the money will be tax-free. Doing this could get owners into expensive trouble with the IRS — they can be fined $100 per day per employee receiving the money, a total of $36,500 per year for each employee. The issue is that some owners treat this cash as a health benefit, but it’s not coverage that obeys the law.
Companies can help employees with their premiums by giving them a raise or a traditional bonus, says Mark Luscombe, a tax analyst with the business information company Wolters Kluwer. This means employers should be withholding income and what’s known as payroll taxes — Social Security and Medicare — from workers’ paychecks, and for companies paying their payroll tax share.
Some of Megan Blair-Valero’s clients in her bookkeeping company have given employees cash for their premiums, wanting to help them out. When she finds out about it, she has to stop working with them so she won’t get her company, Nantucket, Massachusetts-based Fogged In Bookkeeping, in trouble. “We say, we can’t be complicit in this,” she says.
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