Affordable Care Act: What Business Owners and Operators Should Know for Tax Year 2016
Staying in compliance with the ACA is easier said than done, especially for business owners and operators. It’s important to make sure you’re aware of the latest requirements—before the 2016 filing deadlines loom.
For better or worse, the Affordable Care Act is still in effect. This means your tax year 2016 filings and early 2017 operations must continue to remain in compliance. But this is easier said than done, especially for those in the food service industry. Now, before filing deadlines loom, it’s important to make sure you’re up to speed on the latest requirements. Here’s what you should know:
Last year, employers had until May 31 (June 30 for electronic filers) to file their 1094-C and 1095-C forms. For tax year 2016, this deadline has been moved up to February 28, 2017 (March 31, 2017, for electronic filers).
Originally, this meant that employers were required to provide these forms to employees by January 31, 2017, but this changed when the IRS issued Notice 2016-70 on November 18, 2016: The deadline was extended to March 2, 2017. However, this does not mean that you should wait to distribute these forms, as employees need these forms to accurately complete their individual federal income tax returns.
Prior to 2016, a large employer was defined as having more than 100 full-time employees. But in 2016, this number was reduced to 50. Many employers who were on previously on the fringe of this definition are now considered large employers. The same is true for those that saw growth of any amount over the past year. What’s really tricky for those in the food service industry, however, is the definition of a full-time employee.
According to the federal government, full-time employees are those who work, on average, 30 hours or more a week for more than 120 days in a year—or the number of employees you expect to work these hours. When calculating this number, there are several types of employees you shouldn’t include, such as partners; owners of more than 5 percent of other businesses; family members of the household who qualify as dependents on the individual income tax return of an owner, shareholder, or partner; and seasonal employees working less than 120 days a year, to name a few. (You can read the full list on Healthcare.gov.) Part-time employees are defined as those who worked on average less than 30 hours per week, but more than 120 days per year.
In other words, full-time employees, per the ACA definition, are not only those who work 40 hours a week. But even if your staff is made up primarily of flex- or part-time workers, your full-time equivalent (FTE) number could categorize you as a large employer. And since FTE is calculated for the amount of time each part-time employee worked within each time period, the number of FTEs on your payroll could fluctuate from month to month.
Bottom line: Even if you think your business doesn’t qualify as a large employer, it’s worth a second look to make sure you’re in compliance.
Not sure if you’re in compliance? Don’t wait to find out.
Given that our calendar now says 2017, it’s important to make sure you’re prepared for your 2016 tax filings. If you haven’t had a conversation with your tax advisor regarding the distribution of 1094-C and 1095-C forms or the new definition of a large employer, consider making that phone call today. For now, staying in compliance with the ACA is critical to keeping your business on track—regardless of what the future may hold.