The first step to help prepare for your ACA information returns is to identify all common law employees.
According to the IRS, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.
Example: Donna Lee is a salesperson employed on a full-time basis by Bob Blue, an auto dealer. She works 6 days a week, and is on duty in Bob’s showroom on certain assigned days and times. She appraises trade-ins, but her appraisals are subject to the sales manager’s approval. Lists of prospective customers belong to the dealer. She has to develop leads and report results to the sales manager. Because of her experience, she requires only minimal assistance in closing and financing sales and in other phases of her work. She is paid a commission and is eligible for prizes and bonuses offered by Bob. Bob also pays the cost of health insurance and group-term life insurance for Donna. Donna is an employee of Bob Blue.
By identifying common law employees now, you can create a list to help you gather information for all ACA eligible employees and begin the process of calculating totals for your form 1094-C. Remember, all eligible employees will need a form 1095-C mailed to them, so identifying your employees is the first step to successfully completing your ACA obligations.
For more information on ACA information returns filings, check out the IRS website or view our other blog posts linked below:
- Identify full-time employees
- Employer Shared Responsibility
- Determine a contact phone number
- Affordability Safe Harbors
- Identify Covered Individuals and gather information
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.