The Affordable Care Act will make the 2015 tax preparation season unusually bumpy.
The delays of multiple ACA components; the law's rules and their interpretations; tax credit advances and possible repayments; employer "shared responsibility" provisions — all these and more are daunting. Each element affects how individuals, businesses and the federal government are gearing up for what will be an extremely demanding tax year.
Beginning in 2015, companies with 100 or more employees who don't offer health insurance to their workers will see a $2,000-per-employee annual penalty for 70 of those employees (the first 30 are exempt).
Even government agency definitions can be a challenge. For example, the ACA defines small employers as companies with 1 to 100 employees. The IRS defines a small business as 1 to 50 employees.
The first question a company must answer for itself is this: Is it in its interest to offer health insurance? It's possible that a percentage of businesses will find it less expensive to pay the penalty than to ante up for health insurance policies.
Companies with up to 100 employees will face this same decision in 2016. The business tax considerations are significant.
The issue for individuals who bought insurance through the health insurance exchanges may come down to whether the forms they need will be ready by tax time.
The federal government's Department of Health and Human Services is responsible for sending out millions of copies of Form 1095-A, which will be used — as USA Today said in an August article on the subject — "like W-2s for people getting tax credits to help pay health insurance premiums."
The problem is that these forms must be in people's hands by the Jan. 31 deadline to complete their tax returns. Refunds could be delayed.
On the other hand, repayment to the government could also be delayed for taxpayers who received a subsidy to buy health insurance through health insurance exchanges, but whose income ultimately exceeded subsidy thresholds.
Finalizing and distributing these millions of forms will have to take place at the same time that the open enrollment period is occurring to purchase health insurance through the exchanges — i.e., Nov. 15 to Feb. 15.
What individuals and businesses must do right now is get their documentation and information in order, examine their tax exposure in terms of whatever decisions were made concerning the ACA and, by all means, if you need professional assistance, seek it. Now.
Very little about this is easy. Grab the reins and hold on because we could be in for a bucking bronco of a tax season ride.
This was originally printed in the Knoxville News Sentinel on November 6, 2014.Share