How the ACA applies to ALEs

Get to Know the Health Care Law’s Employer Shared Responsibility Payment

Under the Affordable Care Act, applicable large employers – those with 50 or more full-time employees, including full-time equivalent employees – are required to take some new actions.  To prepare for 2016, if your organization is an ALE, you need to track information each month in 2015, including:

  • Whether you offered full-time employees and their dependents minimum essential coverage that meets the minimum value requirements and is affordable
  • Whether your employees enrolled in the minimum essential coverage you offered

You need to track this information because you could be subject to an employer shared responsibility payment if your organization falls into either of these circumstances:

  • You offered coverage to fewer than 70 percent of your full-time employees and their dependents in 2015 and at least one full-time employee enrolled in coverage through the Health Insurance Marketplace and receives a premium tax credit. The 70 percent threshold is for 2015, after 2015 this increases to 95 percent.
  • You offered coverage to at least 70 percent of your full-time employees and their dependents in 2015, but at least one full-time employee receives a premium tax credit because coverage offered was not affordable, did not provide minimum value or the full-time employee was not offered coverage. After 2015, this threshold increases to 95 percent.

Not sure how this change affects you?  Call us at (888)266-0962.

Summer Jobs

Students often get a job in the summer and if it’s your first job… then you’re about to learn all about taxes.  Here are some tips you should know about summer jobs and taxes:

  • Withholding and Estimated Tax.  If you are an employee, then your employer will be withholding tax from your paycheck.  If you are self-employed, then you may have to make estimated tax payments directly to the IRS on set dates during the year.
  • New Employees.  When you get a new job, you will be filling a Form W-4 and employers use it to figure how much federal income tax to withhold from your pay.
  • Self-Employment.  Money you earn doing work for others is taxable.  Some work you do may count as self-employment (like baby-sitting or law care) so be sure to keep good records of your income and expenses related to your work (hint deductions!).
  • Tip Income.  All income earned in the form of tips is taxable.  Keep a daily log to report them as you must report $20 or more in cash tips in any one month to your employer.

Have any questions or concerns?  Call us (888)266-0962… its MUCH easier to help you before you owe money to the IRS…

Child / Dependent Tax Credit

Day camps are common during the summer months as many parents pay for them for their children while they work… if this applies to you, your costs may qualify for a federal tax credit that can lower your taxes.  Here are some reminders to consider when it comes to taking advantage of the child and dependent care credit:

1. Your expenses must be for the care of a qualifying person;

2. Your expenses must be work related… as in, the expense incurred must exist so that you can work / look for work;

3. You must have earned income (eg. wages, salaries, tips);

4. Married couples will need to file a joint tax return in most cases;

5. The credit applies for care at home, daycare, and even day camps;

6. The credit is going to be worth 20-35% of your allowable expenses, depending on your income;

7. The total expense is limited $3,000 for one qualifying person or $6,000 for two or more;

8. Overnight care, care provided by your spouse / older children / dependents does not count;

9. Be sure to keep records for claiming the credit when you file your tax return.

Keep in mind that this is not just a summer tax benefit, we only mention it now because it applies to more people around this time of year.  Feel free to reach out at (888)266-0962 if you have any questions or concerns.

Deductions for disasters

With summer storms starting to build up, we wanted to go over some tips that can help you get more tax deductions if you have to deal with them:

  1. Casualty loss.  You may be able to deduct losses based on the damage done to your property during a disaster. A casualty is a sudden, unexpected or unusual event. This may include natural disasters like hurricanes, tornadoes, floods and earthquakes. It can also include losses from fires, accidents, thefts or vandalism.
  2. Normal wear and tear.  A casualty loss does not include losses from normal wear and tear. It does not include progressive deterioration from age or termite damage.
  3. Covered by insurance.  If you insured your property, you must file a timely claim for reimbursement of your loss. If you don’t, you cannot deduct the loss as a casualty or theft. You must reduce your loss by the amount of the reimbursement you received or expect to receive.
  4. When to deduct.  As a general rule, you must deduct a casualty loss in the year it occurred. However, if you have a loss from a federally declared disaster area, you may have a choice of when to deduct the loss. You can choose to deduct the loss on your return for the year the loss occurred or on an amended return for the immediately preceding tax year. Claiming a disaster loss on the prior year’s return may result in a lower tax for that year, often producing a refund.
  5. Amount of loss.  You figure the amount of your loss using the following steps:
    • Determine your adjusted basis in the property before the casualty. For property you buy, your basis is usually its cost to you. For property you acquire in some other way, such as inheriting it or getting it as a gift, you must figure your basis in another way. For more see Publication 551, Basis of Assets.
    • Determine the decrease in fair market value, or FMV, of the property as a result of the casualty. FMV is the price for which you could sell your property to a willing buyer. The decrease in FMV is the difference between the property’s FMV immediately before and immediately after the casualty.
    • Subtract any insurance or other reimbursement you received or expect to receive from the smaller of those two amounts.
  6. $100 rule.  After you have figured your casualty loss on personal-use property, you must reduce that loss by $100. This reduction applies to each casualty loss event during the year. It does not matter how many pieces of property are involved in an event.
  7. 10 percent rule.  You must reduce the total of all your casualty or theft losses on personal-use property for the year by 10 percent of your adjusted gross income.
  8. Future income.  Do not consider the loss of future profits or income due to the casualty as you figure your loss.
  9. Business or income property.  Some of the casualty loss rules for business or income property are different than the rules for property held for personal use.

ACA Guidelines

For Business: How Seasonal Workers Affect Your ALE Status / ACA Guidelines

When determining if your organization is an applicable large employer, your workforce is measured by counting all of your employees, including seasonal workers.  However, there are some exceptions when it comes to counting those employees who do not work full-time or throughout the entire year.

Generally speaking, if your workforce exceeds 50 full-time employees for 120 days or fewer during a calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days were seasonal workers, then you will not be considered an applicable large employer.

A seasonal worker for this purpose is an employee who performs labor or services on a seasonal basis. For example, retail workers employed exclusively during holiday seasons are seasonal workers.  At our company, some of our part-time tax prepares would not count either.

The terms seasonal worker and seasonal employee are both used in the employer shared responsibility provisions, but in two different contexts. Only the term seasonal worker is relevant for determining whether an employer is an applicable large employer subject to the employer shared responsibility provisions.  For this purpose, employers may apply a reasonable, good faith interpretation of the term seasonal worker.

Hopefully this short post will help answer some questions and concerns for businesses as they handle their summer workforce.  If you want to discuss this in greater detail, feel free to contact our office at (888)266-0962.