How The Affordable Act Will Affect Your Small Business Tax Filings in 2016


The commencement of the Affordable Care Act will affect some small businesses this year at tax time. The most prominent issue for many small businesses is that they can face tax penalties for failing to provide health insurance to employees, or for neglecting to report to the IRS what specific type of coverage they provided for their employees.

The Affordable Care Act in 2016 now applies to businesses that have between 51 and 99 employees. Since the start of 2016, businesses with between 51 and 99 employees are required to provide health insurance to at least 70 percent of their 40 hr+ employees or face a $2,000 per employee tax penalty .

To avoid tax penalties, employers must report, on each employee's W-2 form, the cost of the health coverage that the employer provided. In Box 12 of the form, a breakdown of what the employer and the employee each have paid is mandatory. Fines of $200 per employee could result from failing to report this information, The Internal Revenue Service recently extended the reporting deadline to May 31, 2016, and June 30, 2016, respectively, for fpaper and electronic filings.

Now that the IRS is the gatekeeper for insurance coverage, they are going to start collecting information from employers about the specificities of the insurance which they provided.

While the Affordable Care Act's insurance and reporting requirements can be burdensome to small businesses, we at EJ Pelton are happy to team up with your insurance agent and help determine whether it is a better financial decision to provide insurance to employees or just pay the tax penalty.

Have questions about the Affordable Care Act and how it will affect your business? Call me, Eric Pelton, CPA, The Small Business Specialist Today at 423-622-3156 and ask for a Free Consultation.


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