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W-2 Changes and Filing Tips for Businesses for 2016

The IRS makes yearly adjustments to Forms W-2s and 1099 that employers need to be aware of. Additionally, the new forms, Form 1095-A, Form 1095-B, and Form 1095-C have been introduced due to the Affordable Care Act.

Filing Tips for Businesses for 2016Return filers are required to file a form 1095 in 2016 along with their usual tax forms to report on health care. Employers, including those that offer self-insured coverage to their employees, must report the coverage details of each employee to the IRS. Accounting Today provides the filing details:

“Employers should report this information on Forms 1095-B or 1095-C, depending on the size of the employer. Providing 1095 forms became mandatory starting in the 2015 tax year and filers must send the forms not only to their eligible recipients but also to the IRS in order to remain in compliance with ACA reporting requirements. Filers with 250 or more forms must file them electronically. Incorrect filings will not be penalized for calendar year 2015 filing (reported in 2016) if employers/insurers file on time and make a good faith effort to comply. Below is a summary of each new form related to the Affordable Care Act:

Form 1095-B—Health Coverage
Insurers and self-insured employers that provide health plans are required to report data on all covered individuals.

Form 1094-B—Transmittal of Health Coverage Information Returns
Form 1094-B is the transmittal for Form 1095-B.

Form 1095-C—Employer-Provided Health Insurance Offer and Coverage
Employers with 50 or more full-time employees (including full-time equivalent employees) are required to report (whether or not they offered coverage to their employees) by providing each full-time employee with Form 1095-C. This form requires information such as whether the employee was offered coverage, for which months, and the employee’s share of the lowest-cost monthly premium for self-only minimum value coverage. A large employer with a self-insured plan will only be required to submit Form 1095-C, as the information on Form 1095-B can be included on Form 1095-C.

Form 1094-C
Transmittal of Employer-Provided Health Insurance offer and Coverage Information Returns

“2015 W-2 Form Changes
“Medicaid Waiver Payments
“Certain Medicaid waiver payments are excludable from income for federal income tax purposes. See Notice 2014-7 for additional information.

“Third-party Sick Pay Recap Reporting
“For wages paid in 2015, Form 8922, Third-Party Sick Pay Recap, will be used to report total third-party sick pay wages paid to employees when liability for the employer and the employee portions of Federal Insurance Contributions Act (FICA) taxes on the wages is split between the employer for whom services are normally rendered and the third-party payer. Form 8922 replaces the Third-Party Sick Pay Recap Form W-2 and W-3. Form 8922 is filed with the IRS rather than the SSA.

“Virtual Currency
“The fair market value of virtual currency (such as Bitcoin) paid as wages is subject to federal income tax withholding, FICA tax and Federal Unemployment Tax Act (FUTA) tax and must be reported on Form W-2.”