Tax tips to help you benefit this upcoming tax season!
Advanced Premium Tax Credit
The premium tax credit (PTC) allowed by §36B was created by the ACA to help low-income individuals afford health care coverage. Since most taxpayers with low income cannot wait until the end of the year to get this credit, the credit can be received throughout the year.
To determine the amount the taxpayer can receive as an advanced payment, the prior tax return is used during the time of enrollment. This means the determination for eligibility of the PTC is based on the prior year tax return. Furthermore, the current year tax return will reconcile the difference to determine if the taxpayer owes more tax or is due a credit. If the prior year tax return is not accurate in determining eligibility, the taxpayer can use other documents to substantiate the changes that occurred since the return was filed.
This means that many taxpayers who did not need tax planning before can benefit from it now.
Are you unsure how these items affect your tax return? We can help!
Health Coverage Excise Tax for Large Employers
Large employers (those with at least 50 full-time employees) who don’t offer affordable healthcare coverage that provides minimum essential coverage for all their full-time employees and make contributions toward the premiums, must pay a penalty if any full-time employee is certified to the employer as having purchased health insurance through the state with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee. These excise taxes are nondeductible. The penalty is $2,000 per full-time employee, excluding the first 30. There is transitional relief until 2016 for large employers with at least 50, but fewer than 100 employees. In order to be eligible for transitional relief, an employer must certify that it meets the following conditions:
• Employ on average at least 50 full-time employees, but fewer than 100full-time
• Hasn’t reduced the size of its workforce or the overall hours of service of its
employees unless there is a bonafide business reason.
- Did not eliminate or materially reduce the health coverage, if any, it offered as of February 9, 2014.