Tag Archives: Employers

IRS Small Business Tip – Employee or Independent Contractor??

Issue Number: IRS Small Business Week Tax Tip 2017-02
Inside This Issue
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Employee or Independent Contractor? Know the Rules

The IRS encourages all businesses and business owners to know the rules when it comes to classifying a worker as an employee or an independent contractor.
An employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee. Employers normally do not have to withhold or pay any taxes on payments to independent contractors.
Here are two key points for small business owners to keep in mind when it comes to classifying workers:
1. Control. The relationship between a worker and a business is important. If the business controls what work is accomplished and directs how it is done, it exerts behavioral control. If the business directs or controls financial and certain relevant aspects of a worker’s job, it exercises financial control. This includes:
• The extent of the worker’s investment in the facilities or tools used in performing services
• The extent to which the worker makes his or her services available to the relevant market
• How the business pays the worker, and
• The extent to which the worker can realize a profit or incur a loss
2.  Relationship.  How the employer and worker perceive their relationship is also important for determining worker status. Key topics to think about include:
• Written contracts describing the relationship the parties intended to create
• Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation or sick pay
• The permanency of the relationship, and
• The extent to which services performed by the worker are a key aspect of the regular business of the company
• The extent to which the worker has unreimbursed business expenses
The IRS can help employers determine the status of their workers by using form Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. IRS Publication 15-A, Employer’s Supplemental Tax Guide, is also an excellent resource.
Share this tip on social media — Employee or Independent Contractor? Know the Rules. https://go.usa.gov/x58ra#IRS


New Law “Cures” Small Employer Health Insurance Dilemna

eTax Alert™ (Provided by Western CPE)

New Law “Cures” Small Employer Health Insurance Dilemma

The 21st Century Cure Act has passed Congress and the President has just approved and signed. The legislation provides for an exception from group health plan requirements for qualified small employer health reimbursement arrangements. Beginning in 2017, a small employer may again reimburse employees for individual health insurance premiums without fear of the onerous $100 per day per employee penalty assessed for violation of health care reform.

Plan requirements. To qualify as “a qualified small employer health reimbursement arrangement,” the plan must meet certain requirements.

  1. The plan must be provided on the same terms to all employees. Some employees may be excluded from the plan:
    • employees who have not completed 90 days of service,
    • employees who have not attained age 25,
    • part-time (less than 30 hours a week) or seasonal employees,
    • employees subject to collective bargaining.
  2. The plan must be funded solely by the employer and no salary reduction contributions may be made under the arrangement.
  3. The plan must provide, after the employee provides proof of minimum essential coverage, for the payment of, or the reimbursement of, medical expenses (as defined in §213(d)) of an eligible employee or the employee’s eligible family members.
  4. The plan must provide that payments and reimbursements for any year be no more than $4,950 for an eligible employee and $10,000 if the arrangement provides payment or reimbursement for family members.
    • In the case of an individual who is not covered for the entire year, the limitations are prorated. For example, an employee who is covered for nine months of the plan year may have payments and reimbursements of no more than $3,712.50 (9/12 of $4,950).

Small employer. An eligible employer is one that is not an applicable large employer under §4980H(c)(2). Thus, the employer may offer a qualified small employer health reimbursement arrangement if it has less than 50 full-time and full-time equivalent employees. An eligible employer may not offer a group health plan to any of its employees.

Tax-free fringe benefit. A qualified small employer health reimbursement arrangement payment or reimbursement is not excluded from gross income if, for the month in which such medical care is provided, the individual does not have minimum essential health coverage.

Premium tax credit. For an employee who is provided a qualified small employer health reimbursement arrangement for any coverage month, the premium tax credit for that month will be reduced.

Other rules.

  • The eligible employee must receive proper and timely notice of the plan availability (see §9831(d)(4)(A) for details).
  • The total amount of the permitted benefit must be reported on the employee’s Form W-2.
  • The transition relief provided in Notice 2015-17 is extended for any plan year beginning on or before Dec. 31, 2016.

Example. Sharon has three full-time employees working in her tax practice. She does not provide a group health plan. With proper notice to her employees, Sharon establishes a qualified small employer health reimbursement arrangement effective Jan. 1, 2017 to reimburse up to $4,950 (or a lesser amount if she wishes) of §213(d) medical expenses.

Action item. Small business clients should be advised that Congress, in a rare bipartisan effort, has granted relief to the small business that wants to help employees with insurance premiums and out-of-pocket medical expenses without going through the trouble or expense of adopting a group health plan.

© 2016 Sharon Kreider and Vern Hoven


Health Care Act Notification

Notification to clients regarding filing Forms 1094-C and 1095-C to Employees

These forms are part of the Employer-Provided Health Insurance rules under the ACA (Health Care Act).

They are now required to be filed by employers – including Non-Profit entities that employ 50 or more Full Time Equivalent (FTE) employees.

The 1095-C Form is a Transmittal form to each employee providing information on the health insurance coverage provided by the Employer. It should include the information of the amount of coverage, and the months of coverage for the year.

Employers that offer Employer-sponsored self-insured coverage also use these forms for their employees.

The 1094-C Form is a Transmittal form to IRS summarizing the individual Forms 1095-C (much like a 1096 Form).

These forms were optional for 2014, but are now REQUIRED for 2015. There is a penalty for not providing each employee with a form and for not submitting a copy with the 1094-C to the IRS. The fine is $250 for each 1095-C not provided to employees.

The deadline for providing employees with the Form 1095-C is February 29, 2016.

Form 1094-C
Form 1095-C
Instructions – forms 1094-C and 1095-C

This notification brought to you by Schutte & Hilgendorf, PLLC, CPA’s, a Prescott firm serving the greater Yavapai County, providing audit, accounting, bookkeeping, tax preparation and planning, QuickBooks accounting and setup to individuals, non-profits and businesses.

Contact us for a free initial consultation at (928) 778-0079.


Health Care Act: Tools and Answers for Employers and Individuals

EMPLOYERS (FOR-PROFIT AND NON-PROFIT)!!:

We are receiving information daily regarding the new Patient Protection and Affordable Care Act (ACA) (Also called “ObamaCare”), which is scheduled to phase in starting in 2014. Here’s some important information that will effect both individuals and employers before then:

For Individuals: The Individual Insurance Exchanges will be open for enrollment in October 2013.

For Employers: The scheduled Employer side of it has been delayed until 2015. However, there is a requirement for ALL Employers to post a notice for all new and existing employees (both full and part time) by October 1, 2013

The attached templates can be used by Employers for posting and handouts (click on the link that applies):

Template A_withoutplans: For employers who DO NOT offer a health plan
Template B_withplans: For employers who offer a health plan to all or some of their employees

In addition, we’re excited to announce a new, streamlined health care tool , housed at Business USA, to help you find out exactly what you and your employees need to know about the Affordable Care Act. In a few quick steps, you’ll understand the essentials of new insurance options and other health care changes. We tried it and think it will help you work through all of the options. Click on the link below to access the tool (if the link doesn’t work, copy and paste the URL to your browser):

http://business.usa.gov/healthcare

Rest assured, we will pass on all final, relevant information, links and tools for both individuals and employers, as it becomes available. We at Schutte & Hilgendorf CPAs are trying to keep in front of the information to answer your questions as you begin to contemplate what this means for you individually and as a business owner or manager. Look for announcements and new developments either through direct mailings or email. All content will also be posted on our website, www.prescottaccountants.com.

To find more information directly, go to https://www.healthcare.gov/ , the official website for the ACA.

If you have questions, call us today!

Schutte & Hilgendorf CPAs is a full service public accounting firm, providing tax preparation, planning, audit, accounting, and QuickBooks set and consulting to Prescott and the great Yavapai and Northern Arizona region.  Call us for more information at 928-778-0079