Taxpayers will now be required to show proof of Health Insurance for all family members on their  taxes or pay a penalty for not having coverage. This must be proven on Individual Tax Returns for the 2014 Tax Year.

What does this mean for you?
All persons must have Minimum Essential Coverage (MEC), which is comprehensive health insurance coverage, in order to comply with the requirements set forth in the ACA. This will require you to provide proof to your tax preparer, and will require the tax preparer to complete additional forms for your tax filing.

What does the taxpayer need to provide?

    If you have health insurance:
You must show proof to your tax preparer by providing a Form 1095A, B or C. If you do not have this form, you  must provide a copy of your Health Insurance Card, assurance that the plan meets the Minimum Essential Coverage, the number of months covered for 2014, and who is covered under the health insurance plan.

    If you have coverage through the Marketplace at Healthcare.gov:
 You will be provided with Form 1095A. This must be presented to your Tax Preparer prior     to the completion of your taxes.

    If you were without health insurance with a gap of insurance during the year:
There are some possible exemptions that will keep you from paying any penalties. It is important to contact your tax preparer now to ensure that the proper exemption forms are requested and received prior to the completion of your tax return.

What does this mean for Tax Preparers Requirement?
Due to the additional calculations for possible penalties, the additional Forms to be filed, and the due diligence to ensure the proper completion of your return, all tax preparers will require additional time to complete your return for the 2014 tax filing season.

What about Penalties?
All individuals who are not approved as exempt from coverage are subject to penalties for any month in which they did not have MEC. For 2014, these penalties are a minimum of $95 per adult plus $47.50 per child under age 18 for those who did not have coverage for the full year, and can max out at 1% of household income in excess of the filing threshold that applies to the taxpayer.

IRS has established a 20-point checklist the can help businesses determine if an individual should be treated as an employee or an independent contractor. The correct classification will determine if they should receive a Form W2 or Form 1099. There can be serve penalties for misclassification of employees, or failure to provide independent contractors with a Form 1099.

This checklist helps determine who has the "right of control."

1. Must the individual take instructions from your management staff regarding when, where, and how work is to be done?
2. Does the individual receive training from your company?
   
3. Is the success or continuation of your business somewhat dependent on the type of service provided by the individual?
   
4. Must the individual personally perform the contracted services?
   
5. Have you hired, supervised, or paid individuals to assist the worker in completing the project stated in the contract?
   
6. Is there a continuing relationship between your company and the individual?
   
7. Must the individual work set hours?
   
8. Is the individual required to work full time at your company?
   
9. Is the work performed on company premises?
   
10. Is the individual required to follow a set sequence or routine in the performance of his work?
    
11. Must the individual give you reports regarding his/her work?
    
12. Is the individual paid by the hour, week, or month?
    
13. Do you reimburse the individual for business/travel expenses?
    
14. Do you supply the individual with needed tools or materials?
    
15. Have you made a significant investment in facilities used by the individual to perform services?
    
16. Is the individual free from suffering a loss or realizing a profit based on his work?
    
17. Does the individual only perform services for your company?
    
18. Does the individual limit the availability of his services to the general public?
    
19. Do you have the right to discharge the individuals?
    
20. May the individual terminate his services at any time?
21. Does the employer have control or the "right of control" over the individual's performance of the job and how the individual accomplishes the job?

The greater the control exercised over the terms and conditions of employment, the greater the chance that the controlling entity will be held to be the employer.The right to control (not the act itself) determines the status as an independent contractor or employee. The 20-point checklist is only a guideline, it does not guarantee that a person is correctly classified. There is no one single homogeneous definition of the term "employee." Most agencies and courts typically look to the totality of the circumstances and balance the factors to determine whether a worker is an employee.

The information contained in this blog is for general informational purposes and is not intended to substitute for accounting, tax, legal, investment or other professional advice. Before taking any action, you should consult with a qualified professional provider who understands your particular factual situation.