Dear clients and friends:
To assist you with your year-end filings, we would like to take this opportunity to review with you the new rules brought about by the Affordable Care Act as well as to remind you of Form 1099 requirements.
AFFORDABLE CARE ACT
The Affordable Care Act set forth several new filing requirements that take place in early 2016 in relation to the 2015 tax year. The Affordable Care Act breaks down employers as either a small employer or large employer, each of which will face different requirements:
- Defined as having fewer than 50 full-time employees
- Exempt from W-2 insurance reporting requirements
- Exempt from filing forms 1094 and 1095
- Insurance company will file any applicable forms
Large Employers (also known as an "ALE")
- Defined as having 50 or more full-time employees
- Required to file Forms 1094-C and 1095-C, regardless of whether or not the employer offers health coverage or if employee waives coverage that was offered. These forms should be furnished to the employees by March 31, 2016. Due dates to file with the IRS recently were extended to May 31, 2016 (or June 30, 2016 if filing electronically)
- Subject to a $2,000 penalty per full-time employee for not offering health coverage to substantially all full-time employees (and dependents), excluding the first 30 employees. (For 2015, an ALE with at least 100 full-time employees may exclude the first 80 employees)
- ALE is exempt from the above penalty in 2015 if it offers coverage to at least 70% of its full-time employees (this increases to 95% for 2016 and beyond)
- Required to report insurance information on W-2 if employer files more than 250 W-2 forms. Continues to be non-taxable to recipient of W-2.
We strongly encourage you to contact your payroll provider as soon as possible to ensure that these filing requirements are being met in 2015 and forward.
1099 Forms are due in just a few weeks on January 31st. The classification of your workers as "employees" or "independent contractors" remains a "hot topic" with the IRS, even though some guidelines have been released intending to simplify this area. (click here for our detailed letter).
Per IRS regulation, 1099s are due for each non-corporate vendor to whom you have paid during the year:
- At least $10 in royalties or broker payments in lieu of dividends or tax-exempt income
- At least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments
- Gross proceeds of $600 or more paid to an attorney (even if they are incorporated)
We are available to prepare your Forms 1099. For each independent contractor (individual, partnership, LLP or LLC) to whom you paid $600 or more during the 2015 calendar year, please provide the following information:
- Formal name/business name
- Social Security Number or Taxpayer ID Number
- Amount paid in 2015
Smith Dickson, An Accountancy Corporation