What’s New – 2014

The ACA also included changes for small businesses owners:

2014 Tax Returns

Small Business Health Care Tax Credit changes: The maximum credit you can receive for premiums you pay for your employees’ health care coverage increases from 35% to 50%. If you’re a tax-exempt business, the maximum credit increases from 25% to 35%. You can receive this credit for two consecutive taxable years.

To receive this credit, you must have fewer than 25 full-time equivalent (FTE)* employees whose average annual wage is less than $50,000. You must also pay at least 50% of employees’ (not spouse or dependent) premiums for a qualified health plan offered through a SHOP Marketplace or qualify for an exception to this requirement.

2015 Tax Returns

Business health insurance requirement: Starting in 2015, businesses with more than 50 FTE employees in 2014 (or a combination of full-time and part-time employees equivalent to 50 FTE employees) must either offer a minimum level of health care coverage to employees and their dependents, or pay Employer Shared Responsibility payments to the IRS for any FTEs who purchase coverage through a marketplace and receive the premium tax credit.

The IRS will determine if any FTEs receive the premium tax credit and whether employers owe shared responsibility payments. Employers will be contacted by the IRS and have an opportunity to respond to the IRS before payment is assessed.

The ACA Changes for All Individuals:

Medical and Dental Expenses: Beginning January 1, 2013, you can deduct only the part of your medical and dental expenses that exceed 10% of your adjusted gross income (remain the same -7.5% if either you or your spouse is age 65 or older).

—The ACA Changes for All Individuals:

—Medical and Dental Expenses affect in your Itemized schedule A: 

  Beginning 2013
Most people excess 10% of AGI Previously; excess 7.5% of AGI
Individual >= age 65 excess 7.5% of AGI;Beginning 2016, excess 10% of AGI Previously excess 7.5% of AGI

—Example: If your AGI is $50,000, you can only deduct medical expense that exceed $5,000 ($50,000 * 10%)                                                                                                   (Continued)