Happy New Year! We trust you had a safe and fun holiday season. Now that 2016 is in full swing we want to share with you some tax law changes that are in effect this year. President Obama signed a tax deal in mid-December that made permanent changes to some popular tax breaks and temporarily extended other tax breaks that people have come to rely on.
Here are some changes you’ll want to be aware of:
- All companies with at least 50 full-time equivalent employees must offer affordable health coverage to full time employees and their dependents starting this year or pay a fine. The insurance plan must pay at least 60% of the cost of covered health benefits and provide substantial coverage of inpatient hospital and physician services.
- If you have 50 or more full-time equivalent employees you must use IRS Form 1095-C to report your 2015 insurance data for each full time employee. Forms are due to employees by March 31 and to the IRS by May 31 (June 30 if you are e-filing). You will not be given any extensions for filing this form.
- If you have fewer than 50 full-time equivalent employees and provide self-insured medical coverage, you must also comply with reporting of worker health coverage. You will use Form 1095-B to report 2015 coverage information. Forms are due to employees by March 31 and to the IRS by May 31 (June 30 if you are e-filing). You will not be given any extensions for filing this form.
- The 2016 Social Security Wage Base remains at $118,500. The Social Security Tax Rate on employers and employees is also the same for 2016 at 6.2%. As an employer, you are responsible to pay the 1.45% Medicare tax on all pay.
- The annual cap on deductible contributions to HSAs is rising this year to $6,750 for account owners with family coverage. For self-only coverage that remains at $3,350. If you were born before 1962, you can put in an additional $1000. The minimums for policy deductibles are staying the same at $2600 for families and $1300 for singles. However, the limits on out of pocket costs such as deductibles and copayments have increased to $13,100 for people with family coverage and to $6,550 for individual coverage.
If you have questions or need help with preparing your 2015 tax returns, we highly recommend the professional staff at Robert Murphey CPA. Call them today at 763-493-5799 for a free consultation.