The Affordable Care Act’s main aim is to provide affordable health insurance for a wider breadth of people. But in the couple years since the ACA took effect, it can often seem like it’s been most productive in confusing individuals and small business owners, especially during tax season. If you own a small business and are not sure how the Affordable Care Act affects your tax preparation in Elkhorn, WI, read on to gain some insight about the rules, regulations and resources at your disposal.
Your taxes are going to depend a lot on how big your business is. First, you need to determine how many full time employees you had last year. Count how many employees you had working 30 hours a week or more each month and then add each month’s totals together. Finally, divide that number by 12.
If that number equals out to 25 employees or fewer, that means your business is exempt from penalties, and you may even qualify for a tax credit under the ACA. This is true for employers with fewer than 50 employees as well, though if you’re anywhere close to 50, you’ll want to make sure you’re doing your math right. Trusting a professional with your tax preparation in Elkhorn, WI may make this easier.
Finally, businesses with 50 or more full time employees that do not offer health coverage are subject to an Employer Shared Responsibility Payment, or a “Play or Pay” penalty. Figuring out the size of your business will go a long way toward helping you correctly prepare and file your taxes.
Credits and deductions
The Affordable Care Act doesn’t just mean businesses have to spend more. In fact, when it comes to tax season, many small businesses may be eligible for credits and deductions.
The Small Business Health Care Tax Credit is designed especially for small businesses and small tax-exempt organizations that employ low-income and moderate-income workers. This credit can pay up to half of the cost of providing health insurance for employees, and is meant as an incentive for small businesses to provide first time coverage or continue providing health coverage for their employees. Ask your local accountant if your small business qualifies.
A special deduction also exists specifically for businesses that consist of only one or two employees. If you own a small business by yourself or with your spouse, and you or the both of you are the only employees, you may qualify for this deduction. Whether you purchase health coverage for you and your family through the individual marketplace or through the small group market, you likely qualify for this tax deduction this year. Again, it is best to ask the advice of a qualified accountant if you are unsure about whether you qualify.
Hopefully this has provided some helpful guidelines about how the Affordable Care Act affects your taxes. If you’re left with any questions or concerns, please don’t hesitate to contact A Plus Accounting LLC Traveling Bean Counters. We’ll work with you to make your taxes as simple and painless as possible.