It is important that you know what information you need before you begin to prepare for ACA reporting. We’ve identified the following 7 key topics that may help you to correctly and timely complete your ACA filing before the furnishing and filing deadlines.
1. Identify Common Law Employees
First, you will need to identify all common law employees. According to the IRS, this is defined as anyone who performs services for you if you can control what will be done and how it will be done.
2. Identify Full-Time Employees
The IRS has very specific guidelines regarding what qualifies as a full-time employee.
You can find additional help in calculating the number of full-time employees through the IRS Taxpayer Advocate Service.
3. Verify Employee TIN Information
It is crucial to verify the taxpayer identification numbers (TIN) of your employees in order to avoid having to file corrections, re-issue forms to employees, and potential penalties from the IRS.
Tools such as TINCorrect can help you verify TIN information for your businesses and employees before you file.
4. Confirm Threshold Satisfaction of ACA Requirements
According to the IRS provisions, applicable large employers (ALEs) are required to offer at least 95% of full-time employees minimum essential coverage that is affordable and provides minimum value to their full-time employees and their dependents. Failing to do so may leave you subject to employer shared responsibility payments.
In previous tax years, transition relief was available for some ALEs under section 4980H. However, for the 2019 tax year, no such transition relief will be available for ACA reporting.
5. Determine Which Affordability Safe Harbor to Use
To put it simply, provided coverage is considered affordable if the premium constitutes less than 9.78% of the household income of an eligible employee.
Since household income can be difficult to determine, due to factors such as spousal or secondary income, the IRS offers three safe harbor options to assist in determining affordability.
6. Determine a Contact Option for Form 1095-C Employee Questions
If your employees have questions regarding their 1095-C forms, they should have a good calling number to address their concerns.
7. Self-Insured Plans: Identify Individuals and Gather Information for Form 1095-C
For self-insured plans, you will need to identify the covered individuals (employee and dependents) and their social security numbers. You can use a date of birth if you have made a reasonable attempt to obtain the social security numbers but were unsuccessful.
It is a good idea to gather this information as early as possible. It can be difficult to gather all of the necessary information from your employees in a timely manner.
8. Verify State Filing Requirements
California, Washington DC, Massachusetts, New Jersey, Rhode Island, and Vermont have ACA state requirements in place.
Need additional information?
Check out our Knowledge Base for answers to our most popular questions. You can also contact us.
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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.