By John Solari
Don’t be one of those businesses or individuals sent scrambling for forms or rushing to find documentation for deductions, tax credits or filing requirements at the last minute. Here are two tax changes that require some thought well before the April 15 tax day deadline.
Affordable Care Act forms
The Affordable Care Act has received almost nonstop publicity over the past several years, but despite all the headlines, the new tax forms required by the law might have gone unnoticed by many people.
Taxpayers who received health insurance coverage through the new Health Insurance Marketplace will receive a new form called form 1095-A, which is required for tax filing this year. Taxpayers who received a tax credit to offset a portion of their insurance premiums will need to file form 8962, which can be completed using the information on form 1095-A. Be sure that all Affordable Care Act forms are filed correctly to avoid penalties and tax complications.
Meanwhile, the health care law will affect businesses in different ways depending on their size. Businesses with fewer than 50 employees have no new tax requirements but should check with their accountants to see whether they qualify for new tax credits under the health care law. Businesses that are close to reaching 50 employees should plan carefully, as reaching or exceeding the 50-employee threshold without offering health insurance can result in significant tax consequences. Companies that employ more than 50 people are required to offer health insurance or pay a penalty.
Bill retroactively extends tax credits for 2014
Businesses were bracing for a higher tax bill when more than 50 tax provisions in the tax code expired and were not extended for 2014. But Congress came through at the last minute, reinstating the bonus deduction, research and development tax credits and the Section 179 expensing limits.
The action is good news for businesses that invested in research and development or new equipment in 2014, because the tax savings under these provisions are significant.
However, because the extension of these credits and deductions only cover 2014, businesses are once again uncertain if the tax rules will apply to these investments in 2015. Incentives like these are meant to stimulate business investment, and it is hard to stimulate investment when tax rules change during the last month of the year, leaving businesses no time to make decisions based on the new rules.
Businesses should double check to make sure they take advantage of the reinstated elements of this retroactive extension of tax provisions when filing this year, but should also keep a careful eye on whether those tax credits and deductions will be available for 2015.
John Solari is the managing partner of J.A. Solari & Partners. He has 25 years of accounting experience and is also a member of the American Institute of Certified Public Accountants and the Nevada Society of Certified Public Accountants.