Once again we are approaching year end and would like to inform you of some important changes in tax law and reporting requirements that may affect you as an employer.
With the continuation of the Affordable Care Act (ACA), all employers are still required to report the total cost of health insurance provided under an employer sponsored group plan on an employee’s Form W-2. Be aware that this includes both the employer paid and employee paid portions of coverage for all Major Medical Insurance, Health Flexible Spending Arrangements, Hospital Indemnity Insurance, and Specified Illness Insurance. The amount reported does not affect tax liability, as the value of the employer contribution to health coverage continues to be excludable from an employee’s income, and it is not taxable. This reporting on the employee’s Form W-2 is for informational purposes only, to show employees the value of their health care benefits and to assist in the administration of the ACA.
Please note that if our firm will be preparing your Form(s) W-2 for tax year 2017, the deadline for filing these forms has been moved up to January 31, 2018 regardless of your method of filing. With this drastic change in timing, it is important that we receive your payroll information by January 15th so that we may do our part in keeping you in compliance.
Please keep in mind that we will need the total health insurance cost provided, in addition to all other information that was required in previous years, in order to correctly prepare your year-end payroll forms. If you have a different payroll service provider, please contact them as soon as possible with the necessary health insurance information for inclusion on your employee’s Form W-2.
In addition, if you employ 50 or more persons you may be classified as an Applicable Large Employer (ALE) and subject to further, more complex requirements. Note that the level of 50 employees can apply to the aggregate total of employees at all of your commonly owned businesses. If you believe you may be classified as an ALE for the tax year 2016, please call your payroll provider or give us a call as soon as possible. We can discuss, in detail, the disclosure actions that you must take to avoid any penalties or other possible tax implications.
Thank you for your prompt attention to this matter and again, feel free to contact us with any additional questions or concerns.