Now that the Supreme Court has upheld the Patient Protection and Affordable Care Act, commonly know as the healthcare law, it is time to examine what changes it will have for taxes of small businesses. The fundamental requirement is for all US citizens and legal residents to maintain minimum health coverage. This was upheld under the taxing provisions of the constitution.
Chief Justice Roberts ruled that there is not a legal command to buy insurance but there is a tax for people who choose not to buy insurance. It was interesting that the Chief Justice did not agree with the assertion that the commerce clause could require individuals to purchase insurance.
But enough of the legal talk. I am not a lawyer and we already have enough people pretending to be constitutional experts filling the airwaves. Here are some of the taxes that are included in the law. This space only provides a cursory look at the law and ever business would be well served to talk to their tax accountant to see how it applies to any particular business.
Small Business Tax Credit - Businesses with less than 26 employees and have average wages less than $50,001 are eligible for a 50% credit for non-elective contributions that the company makes for their employees health insurance premiums.
Reporting - If you self insure your employees you must report health insurance coverage to the individual and the IRS. If you use an insurance provider, the requirement is theirs. The employer mus also disclose to each employee the value of the health coverage provided.
Cafeteria Plans - Beginning in 2014 a qualified health plan through an insurance exchange will be considered a qualified benefit.
Employer Coverage - There will be a penalty for employers with 50 employees to offer coverage to full-time employees. The coverage must be affordable to employees and cover 60% cost of benefits. Failure to provide coverage will result in a tax penalty if the employee purchases coverage through a state exchange.
1099 Reporting - If you were concerned about this is was repealed by the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act.
Chief Justice Roberts ruled that there is not a legal command to buy insurance but there is a tax for people who choose not to buy insurance. It was interesting that the Chief Justice did not agree with the assertion that the commerce clause could require individuals to purchase insurance.
But enough of the legal talk. I am not a lawyer and we already have enough people pretending to be constitutional experts filling the airwaves. Here are some of the taxes that are included in the law. This space only provides a cursory look at the law and ever business would be well served to talk to their tax accountant to see how it applies to any particular business.
Small Business Tax Credit - Businesses with less than 26 employees and have average wages less than $50,001 are eligible for a 50% credit for non-elective contributions that the company makes for their employees health insurance premiums.
Reporting - If you self insure your employees you must report health insurance coverage to the individual and the IRS. If you use an insurance provider, the requirement is theirs. The employer mus also disclose to each employee the value of the health coverage provided.
Cafeteria Plans - Beginning in 2014 a qualified health plan through an insurance exchange will be considered a qualified benefit.
Employer Coverage - There will be a penalty for employers with 50 employees to offer coverage to full-time employees. The coverage must be affordable to employees and cover 60% cost of benefits. Failure to provide coverage will result in a tax penalty if the employee purchases coverage through a state exchange.
1099 Reporting - If you were concerned about this is was repealed by the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act.
Labels: business taxes, Health care law, tax changes
