As 2017 approaches, turning your attention to your reporting requirements under the health care law can prevent a beginning-of-the-year rush to gather information. Need additional incentive? Consider this: Though the IRS offered extended deadlines and relief from filing penalties last year, those breaks will likely not apply to this year’s returns. Here’s what to think about as you prepare for the upcoming filing season.
How many employees you have. The key here is understanding that your employee count includes full-time employees as well as full-time equivalent employees. You’re an “applicable large employer,” or ALE, if your business employed an average of at least 50 full-time employees, including full-time equivalent employees, on business days during the preceding calendar year. Special rules apply to related companies with a common owner, seasonal workers, and new employers.
What’s the definition of full-time and full-time equivalent? A full-time employee is one who works an average of 30 or more hours per week (or 130 hours per month). Full-time equivalents are determined by multiplying the number of part-time employees by average hours worked and dividing the result by the hours required for full-time status.
Example. Twenty employees working an average of 15 hours per week are equivalent to 10 full-time employees (20 employees times 15 hours divided by 30 hours).
How do you count employees? Here’s the general rule. Add the total number of full-time employees for each month of the prior calendar year to the total number of full-time equivalent employees for each month of the prior calendar year. Divide that number by 12. Is the answer fewer than 50? You’re not an ALE, and you generally have no reporting requirements. If the answer is 50 or more, you are an ALE.
The forms you’ll need to file. If your employee count reveals that you are an ALE, you’re required to file a Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, for each employee who was a full-time employee for any month of the calendar year. You’ll also have to file one or more Forms 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. Form 1095-C informs individual employees about the health coverage offered by your business. Form 1094-C reports the summary of all your Forms 1095-C.
Form 1095-C (copies sent to employees) ‒ January 31, 2017
Forms 1094-C and 1095-C (copies due to IRS, if filed on paper) ‒ February 28, 2017
Forms 1094-C and 1095-C (copies due to IRS, if filed electronically) ‒ March 31, 2017
NOTE: This newsletter is issued annually to provide you with information about minimizing your taxes. Do not apply this general information to your specific situation without additional details. Be aware that the tax laws contain varying effective dates and numerous limitations and exceptions that cannot be summarized easily. For details and guidance in applying the tax rules to your individual circumstances, please contact us.
–Next: Part V – Wrap Up Tax Benefits for Year-End Charitable Gifts–
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