After identifying your common law employees, the next step to preparing for ACA reporting is determining your monthly total of full-time employees.
For purposes of the Employer Shared Responsibility provisions, the IRS defines a full-time employee as such:
“[A]n employee is a full-time employee for a calendar month if he or she averages at least 30 hours of service per week. Under the final regulations, for purposes of determining full-time employee status, 130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week.”
Your number of full-time employees will affect the determination of whether Employer Shared Responsibility provisions apply to your business and whether an Employer Shared Responsibility payment is owed, as well as the amount of such payment.
The IRS provides two methods of measurement in determining whether an employee is classified as a full-time employee.
The first method is a monthly measurement method. Under this method, you would determine each employee’s status by counting each employee’s number of service hours for each month.
The second method is the look-back measurement method. You may determine the status of an employee during a future period (referred to as the stability period), based on the number of service hours of the employee in a prior period (referred to as the measurement period). This method is only available for the purposes of determining and computing liability for an Employer Shared Responsibility payment. This method is not for determining whether you are an applicable large employer (ALE). The look-back measurement method also provides special rules that apply in various circumstances, such as variable-hour employees, seasonal employees, and employees of educational organizations.
Identifying your monthly number of full-time employees will prepare you to report the monthly totals required for Form 1094-C. This will also help you estimate how many Form 1095-C copies you will need to issue to your ACA eligible employees.
Once you have determined your list of eligible employees and before you file your ACA reporting, you should make sure to verify your employee TIN information.
Need More Information?
For more information on Form 1095-C filing, please view the IRS Instructions or check out our other blog posts linked below:
- Identify common law employees
- Employer Shared Responsibility
- Determine a contact phone number
- Affordability Safe Harbors
- Identify Covered Individuals and gather information
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BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.