Small Employer Tax Credit
The health care reform law does not specifically require an employer to offer health coverage to its employees. However, beginning January 1, 2010, small employers that provide health care coverage to employees and that meet other requirements may be eligible for a federal income tax credit to offset premiums they pay for certain employees. Small employers can find more information on the tax credit at IRS.gov
IRS DELAYS FORM W-2 Health Coverage Reporting
Employers were required to report the value of health care benefits on employees' W2 tax statements in 2011.
In a welcome step, IRS has announced it will not require reporting the value of employer-sponsored health coverage on employees’ Forms W-2 for 2011. This year’s comprehensive health care reform law created a host of new reporting and disclosure requirements for employers, including a mandate to show the value of employer-provided coverage on Forms W-2 starting in 2011.
Reason for relief. IRS delayed the reporting requirement to give more time for payroll system updates and other changes that will be needed to collect data and report health coverage information. Instead, employers should anticipate reporting an employee’s employer-sponsored coverage in 2012 on the W-2 forms typically issued early in 2013.
More guidance to come. A draft Form W-2 indicates that employers will report health coverage in Box 12 using Code DD. IRS intends to provide additional guidance later this year, which presumably will identify what data employers will need to collect and how they should calculate the value of an employee’s health coverage for Form W-2 reporting.
Employer coverage remains tax-free. Even though the value of employer-sponsored health coverage will have to be included on the Forms W-2 issued for 2012, the reporting will be for information purposes only and will not cause the coverage to be taxable to employees.
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