Tax Check-Up: The Affordable Care Act & You
- October 1, 2016
- Posted by: jd-admin
- Category: Blog
Are you a new business owner, or have you experienced growth in the last year? If so, the tax provisions of the Affordable Care Act could affect you differently this year than last. Our Austin tax preparation professionals here at Escobar & Associates have put together a brief primer on some of the ways the ACA can affect you and your tax filings, to give you a general idea of what will be required of you.
Whether this is the first year of your business, or merely the first year you’ve had employees, here are the basics. The Affordable Care Act of 2010 outlines specific responsibilities that employers now have to their employees in regards to health care coverage. The application of these new responsibilities has been spaced out over a number of years so that each year more and more of them apply. This has helped to not overwhelm employers all at once. However, it does mean that your company’s tax structure and requirements have likely changed since last year.
These responsibilities can most simply be broken down into two chunks: large employer responsibilities and small employer responsibilities. Under the ACA, a large employer is generally defined as personally having or belonging to an ownership group that contains 50 or more full-time equivalent employees. Large employers have annual reporting obligations about health insurance coverage offered to employees and may be required to make additional payments based on that reporting.
Small employers have some of the same reporting requirements as large ones but can purchase affordable insurance through the Small Business Health Options Program (SHOP). They are also potentially eligible for the Small Business Health Care Tax Credit if they cover at least half of their full-time employees’ premium costs and have fewer than 25 employees with average annual wages of less than $50,000 per year.
The IRS counts full-time equivalent employees as those who average either a minimum of 30 hours of service per week or 130 hours per month. Hours of service include not only hours for which an employee is paid or entitled to be paid for administration of duties to the employer, but also hours for which an employee is paid or entitled to be paid for time when no such work occurs, as due to sickness, disability, vacation, holidays, jury duty, military service, etc.
This helpful guide from the IRS gets into more depth about a number of these and related topics, including the Employer Shared Responsibility Provision, Flexible Spending Arrangements, and more. It can be important to keep yourself abreast of large-scale changes in the way the government monitors and regulates your business, but it’s just as, if not more, imperative to seek qualified and professional help when dealing with matters as complex and important as the federal tax code and all its ensuing requirements.
The tax preparation experts at Austin-based Escobar & Associates can help you through every part of this complicated process from bookkeeping on, freeing up your valuable time and ensuring you don’t make any costly mistakes. Contact us today to schedule a physical for your tax records and let’s make sure you’re in peak condition.