Affordable Care Act Compliance Part II: The Employer

Jan 25, 2016

  • 50-99 employees – Employers did not need to offer health care coverage until this year, 2016.
  • More than 100 employees – Employers were only required to offer coverage to 70% of employees and their dependents) starting in 2015. Starting in 2016, employers have to offer coverage to 95% of their employees to avoid a penalty.
  • The Internal Revenue Code §6056 requires an applicable large employer (ALE) (50 or more employees hired in any calendar year) to file and furnish information relating to the health insurance that it offers (or does not offer) to its full-time employees and their dependents. This information is provided to assist the IRS with administering the ACA Employer Mandate (generally requires ALEs to offer coverage to their full-time employees and their dependents or be subject to a potential penalty). This information also assists the IRS with administering the premium tax credit provided to individuals who enroll in coverage through the Marketplace (Exchange).

These notifications are reported on forms 1095-B and 1095-C. A form 1094 is the transmittal form for each of these notifications. Form 1095-B is for small or large employers that offer a self-funded plan (and for insurance companies). Form 1095-C is for Applicable Large Employers ALEs (50 or more employees) to report their health care plan that meets minimum value and affordability standards or face a penalty for each employee receiving subsidized coverage through the Marketplace (Exchange).

Fortunately, the IRS issued extensions to employers who must file either form 1095-B or 1095-C. The deadline to submit to the IRS and distribute these forms to covered individuals was extended until March 31, 2016. The deadline for this form is May 31, 2016 (if filing in paper) or June 30, 2016 if filing electronically. An extension is automatically granted for 30 days if the employer files an extension with the IRS before the deadline, either in paper or electronically.

If you required additional information or have questions about how the ACA may affect your business, please give your William Vaughan Company representative a call.

Categories: Healthcare & Dentistry

Affordable Care Act Compliance Forms Part I: The Individual

Jan 19, 2016

The Affordable Care Act (ACA) continues to raise compliance concerns for many businesses and individuals alike. The IRS recently introduced new tax forms for individuals, employers and health insurance providers to determine if shared responsibility payments are necessary. Such payments are penalty fee for those who failed to obtained health insurance as instructed by ACA legislation. If you do not have health insurance, or were subject to a cap in your coverage, you may have to individual responsibility payments.

Form 1095-A This form should be provided to the individual who is participating in the health care marketplace (often called Exchanges). They will from from the insurance company providing coverage. The 1095-A form is a health insurance marketplace statement and should be used to complete your income tax filing. It may also be used to claim premium tax credits or adjust any payments which may be due.

Form 1095-B This form will be sent to covered individuals and dependents by the insurance company providing coverage through an employer-sponsored plan. In the case of an employer partially or self-funded plan, this form must also be sent to the employees of the employer. Form 1095-B is used to verify your compliance with minimum essential coverage (MEC).

Form 1095-C This form is used by employers with more than 50 full-time employees or full-time equivalent to prove coverage was offer to you by your employer in 2015. The form will outline the coverage offered by your employer and whether or not you chose to participate. This form can also be used to complete your tax return. If you receive any of the above forms and have questions or concerns about the content or methods for filing your tax return, please call your William Vaughan Company representative.

Categories: Healthcare & Dentistry

New 2016 City Due Dates for Ohio

Jan 12, 2016

The Ohio municipal tax legislation is effective January 1, 2016. It requires updating local income tax ordinances to comply with the new Ohio Revised Code 718 . This will result in a number of provisions becoming uniform across the state. Most of the changes become effective with the 2016 tax year for tax returns filed in 2017. However, there are some changes that will take effect now. One of these changes is the city estimated tax due dates. Previously, the due dates for the city estimated payments had been set by each municipality. As of January 1, 2016 they are all the same, which might make it a little less confusing when paying estimates to more than one city. The due dates for all quarterly city estimated tax payments will be April 15, June 15, September 15, and December 15. You are required to make quarterly payments of estimated tax if the estimated tax payable will exceed $200 for the year. To make sure you are safe from penalties you will want to pay 90 percent of the current year tax liability or 100 percent of the prior year tax liability. You will not have to worry about paying estimated taxes to a city if you did not live in that city on January 1st of the taxable year. Another change that will take effect January 1, 2016 are the due dates for the city withholding tax payments. If you are paying quarterly, the due dates are April 15, July 15, October 15, and January 15. If you are making monthly payments, they will be due 15 days after month end. You will have to file monthly if your prior year annual total withholding for the city exceeds $2,399.00 or if any month of prior quarter withholding for the city exceeds $200.00. The reconciliations for the withholdings are due the last day of February and must include the W-2 information for each of the employees working in the city, and local data naming other cities for which tax was withheld. If you are used to paying your city estimated tax payments on different dates make sure you update your records to ensure you are filing on a timely basis.

Categories: Healthcare & Dentistry

Immediate Action Required: Updating Your Capitalization Policy

Dec 17, 2015

Business_Meeting28During 2015, you have more than likely been following a “capitalization policy” for purchasing fixed assets, computers, equipment etc. Under such policy, you immediately deduct some purchases and capitalize others. The limit which you are able to immediately deduct purchases (de minimis safe harbor limitation) has now been increased from $500 to $2,500 for costs incurred during taxable years beginning on or after January 1, 2016. This requires you to increase your Accounting Policy’s stated dollar threshold to the $2500. Act now because as of January 1, 2016, you’re required by law to have accounting procedures in place with regard to expenses: (1) Amounts paid for property costing less than a specified dollar amount ($2,500); or (2) Amounts paid for property with an economic useful life of 12 months or less.

We recommend you make certain your policy is written and you update the dollar amount stated to $2,500. If you find you do not currently have a written policy, take the time to develop one by December 31, 2015, which states “…assets with lives that extends beyond one year and have a cost of more than $2500 are capitalized and depreciated throughout their useful lives.” You can use an amount in excess of the $2500 de minimis safe harbor in your policy, however, you will then absorb the burden of showing such treatment ‘clearly reflects income.’

Also note, taxpayers with an applicable financial statement (AFS), may expense amounts paid for tangible property up to $5,000. For those taxpayers without an AFS, the threshold is $2,500.

Now is the time to review or adopt a formal capitalization policy. Take action before year-end! If you have any questions or would like additional information please contact your William Vaughan Company professional.

Categories: Healthcare & Dentistry

Tax Planning Tips

Dec 02, 2015

Before 2015 comes to a close, take the time to consider potential year-end tax planning strategies, such as those discussed below.

Capital Gains and Losses

Assess your capital gains situation for the year and use the “netting” rules to minimize your taxes. If you have capital gains for the year, you can use capital losses to offset those capital gains, plus an additional $3,000 of ordinary income ($1,500 if married filing separately) annually. Moreover, you may carry forward unused capital losses to future tax years, subject to the same restrictions.

Taxes3Prepay State Tax

Taxpayers who itemize on their federal returns may generally deduct any state income taxes paid during 2015. However, because the fourth estimated payment is generally not due until January, payment on the due date renders the deduction unavailable until the year it is paid. Instead, consider paying your fourth quarter payment by the end of December to increase your deduction for 2015. Or have more state income tax withheld from your pay before year-end if you expect to owe tax when you file your return. Note that these strategies aren’t beneficial to taxpayers subject to the alternative minimum tax.

Contribute More to Tax-favored Retirement Accounts

Employees enrolled in retirement savings plans who haven’t reached their plan’s contribution limit may want to increase their pretax contributions prior to year-end. Doing so would decrease their taxable income. For 2015, the IRS dollar limit on elective deferrals to 401(k), 403(b), and most 457 plans is $18,000, plus an additional $6,000 for those 50 and older. (Additional plan limits may apply.)

Fund a Health Savings Account

Individuals covered by a high-deductible health plan and who meet other eligibility requirements may make deductible contributions to their health savings accounts. Generally, for 2015, the limits are $3,350 for self-only coverage and $6,650 for family coverage. Contributions can be made until the account holder’s tax return due date (without extensions).

Take Required Distributions

Generally, individuals age 70½ or older who have IRAs or retirement plan accounts must take their required minimum distributions (RMDs) before the end of the calendar year. Failure to do so may result in a 50% penalty on withdrawals not taken.

Taxpayers who turn 70½ in 2015 may wait until April 1, 2016, to take their first RMD. However, because a second RMD would have to be taken before the end of 2016, you may wish to take your first RMD this year if it will help you avoid a higher marginal tax rate in 2016.

For more information on how our team can help you minimize your tax burden, call us today at (419) 891-1040.

Categories: Healthcare & Dentistry