On January 20, 2015, the IRS began accepting and processing tax returns for the 2014 tax year. Here are three changes you should be aware of when preparing to file your business or individual return:
1. New Requirements Associated with the Affordable Care Act
When your employees file their income tax return, they may find additional requirements due to the Affordable Care Act. For a majority of taxpayers, simply checking a box on Form 1040 or 1040A to verify that they had health insurance coverage for all of 2014 is all that’s required. If your employees purchased subsidized insurance through the HealthCare.gov marketplace, however, they may need to complete additional forms. Follow this IRS guide to determine what’s required of you and your employees; here’s a summary of some of the common situations:
If all members of your family had qualifying health coverage the entirety of 2014
Simply check the box on line 61 of Form 1040; no further is action required.
If you qualify for an exemption from purchasing health insurance
Attach Form 8965, which is used to report a marketplace-granted coverage exemption (you’ll need the exemption certificate number) or an IRS-granted coverage exemption, to your return.
If you did not have coverage and did not qualify for an exemption from the coverage requirement
You will need to make an individual shared responsibility payment with your 2014 return.
If you bought coverage through the marketplace
You should receive Form 1095-A in the mail; you may need this to complete Form 8962 to reconcile any advance payments of the credit with the credit, the Premium Tax Credit form, which should be attached to your tax return.
2. New Standard Mileage Rates
Each year, the IRS provides optional standard mileage rates for business owners to calculate the tax-deductible cost of driving a vehicle for business purposes. (These rates can also be used by employers to reimburse employees who use their personal vehicle for business.) Here are the rate changes for miles driven beginning January 1, 2015:
Medical or moving miles
In service of charitable organizations
3. New Maximum Amount for the Small Business Health Care Tax Credit
If you are an employer with fewer than 25 full-time equivalent employees, pay an average wage of less than $50,800 for 2014 or $51,600 for 2015 a year (amount is adjusted annually for inflation), and you pay at least half of premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace or qualify for an exception to this requirement, you may be eligible for the Small Business Health Care Tax Credit.
For tax years 2014 and later, the maximum credit is 50 percent of premiums paid by small-business employers and 35 percent of premiums paid by small tax-exempt employers. Note that this credit is only available to eligible employers for two consecutive taxable years.