Businesses

NEW FILING DEADLINES ANNOUNCED BY THE IRS

Form 1120 Taxpayers

The due date for taxpayers’ Form 1120-U.S. Corporation Return of Income (other than taxpayers with a June 30 year end) is now 3 ½ months after the end of the corporation’s taxable year. For 2016 calendar year corporate taxpayers filing Form 1120, the due date is now April 15, 2017 (i.e. a month later than the previous due date of March 15). An automatic five-month extension of time to file Form 1120 is available. The extended due date for a calendar year corporation remains September 15 until 2026 (at which time it will become October 15).

The due date for a taxpayer with a fiscal year end filing Form 1120 (except for a taxpayer with a June 30 year end) is 3 ½ months after the end of the taxpayer’s taxable year. Fiscal year taxpayers with a fiscal year end other than a June 30 year end receive an automatic six-month extension of time to file Form 1120.

The due date for corporate taxpayers’ Form 1120 with a June 30 year end filing remains the same (September 15), 2 ½ months after the end of the taxpayer’s taxable year, until tax years beginning after December 31, 2025, when the due date will become October 15. A June 30 year end corporate filer receives a 7-month extension until 2026, at which time the extension period will become 6 months.

Form 1065 Taxpayers

The due date for a taxpayer’s Form 1065-U.S. Partnership Return of Income is now 2 ½ months after the end of the partnership’s taxable year. For 2016 calendar year taxpayers filing Form 1065, the due date is now March 15, 2017 (before this change the due date would have been April 15). An automatic six-month extension of time to file is still available to taxpayers from the original due date of the return. The extended due date remains September 15 for calendar year partnerships. Many banks and other taxpayers rely on information in partnership Schedules K-1 in order to complete their tax returns, and the theory is that this change in partnership due dates will allow them to receive this information sooner.

Form 1120S Taxpayers

The original and extended due dates for taxpayers filing Form 1120S U.S Income Tax Return for an S Corporation remain unchanged.

Form 1041 Taxpayers

There is no change to trust tax returns’ original filing deadlines, but extended deadlines for some are changed. To allow trusts to more easily incorporate partnership K-1 income allocated to them, all calendar year-end trust returns that are extended may file as late as September 30, rather than the historical deadline of September 15. Most non-calendar year-end trust returns that are extended will continue to receive a 5-month extension.

Report of Foreign Bank and Financial Accounts (FBAR Filers)

The due date for all taxpayers filing 2016 FinCEN 114-Report of Foreign Bank and Financial Account (FBAR) has changed for ALL TAXPAYERS from June 30, 2017 to April 15, 2017. However, unlike in the past, there is a provision for an automatic six-month extension until October 15, 2017.

Form 1099 MISC

Taxpayers reporting amounts in Box 7 on Form 1099-MISC (Non-Employee Compensation) must send forms to the payment recipient and the IRS by January 31, 2017; all other 1099s follow the usual IRS filing deadlines (February 28 if paper-filed; March 31 if filed electronically).

Expanded Form 1098 Mortgage Interest Reporting

In addition to the previous information that is required to be included on Form 1098, effective for returns required after December 31, 2016, the following additional information needs to be furnished to a payor with respect to a debt secured by real property:

  1. The amount of outstanding principal on the mortgage as of the beginning of the taxable year;
  2. The loan origination date;
  3. The address (or other description in cases where no address exists) of the property securing the mortgage.

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Tax Planning Tips for Business Owners

Going into the new year is a bigger challenge than in past years so we have compiled a checklist of actions that can help you save tax dollars.  Some topics in this checklist include:

  • Hiring unemployed workers
  • New business equipment and machinery
  • Business property expensing
  • Retirement plans
  • and more!

The Affordable Care Act is here!!!

How does it affect your business?

Here are some FAQ’s that may help.

Will I be required to offer health insurance to all my employees?

Effective January 2014, if you have 50 or more full-time equivalent employees, the Affordable Care Act requires you to offer your full-time employees “affordable minimal essential coverage” (see definition in Taxpayer FAQs), or you may have to pay a penalty. The Affordable Care Act does not require you to offer health insurance or pay penalties for part-time employees. If you have fewer than 50 full-time equivalent employees, you would not be required to offer your full-time employees coverage, nor would you subject to a penalty.

Use our calculator to determine your number of full-time equivalent employees, whether you are a large or small employer, and any potential penalty.

Who is counted as a full-time employee?

A full-time employee (for the requirement of offering insurance) is one who works an average of at least 30 hours per week.

Will I be required to offer health insurance to part-time employees?

No, part-time employees (those working fewer than 30 hours per week on average) are only used in the calculation to determine whether you are a large or small employer. If you have 50 or more full-time equivalent employees, you’re defined as a large employer, and are required to offer insurance to full-time employees. The Act does not require employers to offer health insurance to part-time employees or pay penalties for not offering insurance to part-time employees.

Do penalties apply to part-time employees?

No, part-time employees are not counted when calculating the employer penalty. An employer will not pay a penalty for any part-time employee, even if that employee receives subsidized coverage through an Exchange. Part-time employees are used only when calculating whether the employer is a large employer and thus required to offer full-time employees coverage, not when calculating a penalty.

Do I have to offer insurance to a new full-time employee on the first day of employment?

Employers are allowed a waiting period of 90 days without incurring a penalty for non-coverage. On day 91, employers must offer coverage to new hires or pay the penalty for not doing so.

Do I have to include seasonal workers when calculating full-time equivalent employees?

Yes, but there is a “Seasonal Worker Exception.” If the sum of an employer’s full-time employees and full-time equivalent employees is 50 or more for 120 or fewer days and the employees in excess of 49 are seasonal workers, the employer is not considered to employ more than 50 full-time employees, thus it would not be considered a large employer that would be subject to penalties.

Example: The employer has 30 full-time equivalent employees, but hires 40 seasonal employees to work October 1 through December 31. The total full-time equivalent employees would appear to be 70 for October–December, but the employer is not required to include the 40 seasonal employees because they are not employed for more than 120 days. The employer is not a large employer, since it has only 30 full-time equivalent employees. Four calendar months may be treated as the equivalent of 120 days. The four calendar months or the 120 days do not have to be consecutive.

I’m a small employer, how will the Affordable Care Act affect me?

Employers with fewer than 50 full-time equivalent employees are exempt from penalties for not offering insurance to full-time employees.

The Credit for Small Employer Health Insurance Premiums is available to help offset the cost of insurance for companies that have 25 or fewer employees and a workforce with an average wage of up to $50,000.

Can I pay less payroll taxes all year long because I plan on claiming the Credit for Small Employer Health Insurance Premiums?

No, the Credit for Small Employer Health Insurance Premiums is for income tax, not payroll taxes (income, Social Security and Medicare taxes).

Can I count the Credit for Small Employer Health Insurance Premiums when I’m figuring estimated tax payments for the year?

Yes, you may include the credit when determining estimated tax payments for the year in which the credit applies, following regular estimated tax rules.

Does the Affordable Care Act have requirements that are subject to all employers, large and small?

Yes, all employers will serve as a source of information for their employees. As of March 1, 2013, employers must inform employees about the Exchange in their state and how to access it. Guidance is expected soon to help employers with what information should be provided and how to provide it.

Can I still purchase coverage through my agent or do I have to buy insurance through an Exchange?

You are not required to buy insurance through the Exchange. If you prefer, you may purchase insurance through an insurance agent or broker.

Should I offer health insurance to my employees (and their dependents) or pay the penalty?

Beginning in 2014, a large employer who has at least one full-time employee receiving the Premium Tax Credit will be subject to a penalty of $2,000 times the total number of full-time employees minus the first 30.

Example: if there are 50 full-time employees and one of them receives a Premium Tax Credit, the calculation would be 50–30 = 20 full-time employees, times $2,000, for a penalty of $40,000 (assumes coverage is not offered for the full year).

Keep in mind, the insurance offered to employees must be affordable, or a large employer who offers insurance could also incur a penalty if at least one full-time employee receives the Premium Tax Credit. The employer would be subject to a penalty of the lesser of $3,000 for each employee receiving the Premium Tax Credit or $2,000 for each full-time employee, excluding the first 30 employees. Employers with fewer than 50 employees are exempt from penalties.

Calculate the employer’s projected penalty

If I offer health insurance to employees (and their dependents), does that mean I won’t incur any penalties?

Not necessarily. If the insurance is not affordable and at least one full-time employee receives the Premium Tax Credit, you would be subject to a penalty. The penalty is the lesser of $3,000 for each employee receiving the Premium Tax Credit, or $2,000 for each full-time employee, excluding the first 30 employees.

Example: A large employer with 50 full-time employees offers insurance that is not affordable to all of its employees (their wages are lower). Three employees receive the Premium Tax Credit. The penalty would be $9,000, calculated as $3,000 times 3 employees, because that is less than 50–30 = 20, times $2,000 = $40,000.

How can I figure whether the insurance I offer is affordable for my employees?

The rule is that if the employee’s share of the premium is more than 9.5% of the employee’s annual household income, the coverage is not affordable. The Affordable Care Act allows you to use the amount in box 1 on the employee’s Form W-2 as a safe-harbor way to figure affordability for the employee.

The safe harbor would not affect an employee’s eligibility for the Premium Tax Credit. Using a safe harbor method is optional. An employer may choose to use a safe harbor for all its employees or for any reasonable category of employees, provided it does so uniformly and consistently for all employees in a category.

If you offer more than one insurance plan, the affordability calculation would apply to the lowest-cost plan available to the employee that also provides the minimum value (covers at least 60% of covered healthcare expenses).

How can I tell whether my plan provides minimum value?

The IRS and the Department of Health and Human Services will provide a calculator to help you determine. You’ll be able to enter information about your plan, such as deductibles, co-pays, percentages covered and so forth. If the calculation shows that your plan covers at least 60% of covered healthcare expenses, it provides minimum value.

Are there penalties for large employers who offer required coverage that is unaffordable to their employees?

Yes, in certain circumstances. If the insurance does not cover at least 60% of covered healthcare expenses, or if the employee share of the premium is more than 9.5% of an employee’s income, then the employee can get insurance in an Exchange and be eligible for the Premium Tax Credit. If a full-time employee receives the credit, the employer will incur a penalty.

I heard that some health plans are considered “grandfathered,” what does that mean?

Grandfathered plans are those what were in existence on March 23, 2010, when the Affordable Care Act was signed into law. Rules were issued effective July 12, 2010, regarding what changes can be made to plans and maintain grandfathered status. The rules also specify changes that will trigger a loss of status. Read more about grandfathered plans

If I have three separate restaurant companies, are they each considered separate employers under the Affordable Care Act?

Not necessarily. A single employer is defined by the “Common Control” clause in the tax code [IRC Sections 414 (b), (c), (m), (o)]. If considered a single employer, all the employees must be combined together for purposes of calculating whether an employer has 50 full-time equivalent employees.