New Tax Forms for the ACA Make Filing Tough
Small business owners are required to complete additional forms next tax season to comply with the ‘Affordable’ Care Act. Businesses with over 50 full-time employees need to track and record employees health expenditures for the year on a monthly basis. On February 8th the IRS released the new form, 1095C, for companies to file in 2016.
Companies are putting into place procedures to calculate individual health-care expenditures for each employee. The IRS will use the information to determine if employers are providing affordable care to their employees. Penalties are as high as $3,000 an employee if companies are not providing health care.
Small employers are having a more difficult time tracking this information and could have an undesirable burden to comply with the law. It would be easier to give a total amount of funds used to purchase health care for the company, but breaking it down to each employee makes the task complex.
Larger employers, over 100 employees, need to file this form for 2015. The smaller 99-50 employee size gets a break for one year. Some companies are out-sourcing the information gathering to avoid having to complete the form themselves. Others have moved employees to part-time or laid off employees to get under the 50 employee threshold.
The Affordable Care Act and Form 1095 A – the Basics