Employee Retention Tax Credit

Employee Retention Tax Credit

Employee Retention Tax Credits under CARES ACT have been available yet there has been confusion surrounding this. Employee Retention Tax Credits (ERTC). Much of this has been covered under Corona Virus Resource Page –What the Coronavirus Means for Your Business.   The ERTC was extended and modified by the Consolidated Appropriations Act of 2021. 

COVID-19 Employee Retention Credit available for Businesses Financially Impacted

The Treasury Department and the Internal Revenue Service today launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.

FAQ

Does my business qualify to receive the Employee Retention Credit?

The credit is available to all employers regardless of size, including tax-exempt organizations. There are only two exceptions: State and local governments and their instrumentalities and small businesses who take small business loans.

Qualifying employers must fall into one of two categories:

1.The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter.

2. The employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

How is the credit calculated?

The amount of the credit is 50% of qualifying wages paid up to $10,000 in total. Wages paid after March 12, 2020, and before Jan. 1, 2021, are eligible for the credit. Wages taken into account are not limited to cash payments, but also include a portion of the cost of employer-provided health care.

How do I know which wages qualify?

Qualifying wages are based on the average number of a business’s employees in 2019.Employers with less than 100 employees: If the employer had 100 or fewer employees on average in 2019, the credit is based on wages paid to all employees, regardless if they worked or not. If the employees worked full time and were paid for full-time work, the employer still receives the credit.

Employers with more than 100 employees: If the employer had more than 100 employees on average in 2019, then the credit is allowed only for wages paid to employees who did not work during the calendar quarter.

I am an eligible employer. How do I receive my credit?

Employers can be immediately reimbursed for the credit by reducing their required deposits of payroll taxes that have been withheld from employees’ wages by the amount of the credit.

Eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns or Form 941 beginning with the second quarter. If the employer’s employment tax deposits are not sufficient to cover the credit, the employer may receive an advance payment from the IRS by submitting Form 7200, Advance Payment of Employer Credits Due to COVID-19.

Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.

Where can I find more information on the Employer Retention Credit and other COVID-19 economic relief efforts?

Updates on the implementation of this Employee Retention Credit, Frequently Asked Questions on Tax Credits for Required Paid Leave and other information can be found on the Coronavirus page of IRS.gov.

Do you have a Checklist for the Paycheck Protection Loans Documentations?

Start preparing NOW. Gather documents that provide proof of payment for allowable expenses under the Paycheck Protection Program and be ready to make related certifications for the application.

I’m working with a PEO, how do I get these forms to the IRS?

When partnering with a PEO, the PEO may request an attestation from the client or the client‘s CPA  certifying that the client qualifies for the ERTC.  This is because the PEO is unable to verify that the client incurred a reduction in gross receipts or otherwise qualified for the credit.  Furthermore, indemnification may be requestedgiven that incongruities with claiming the credit must be reconciled on the PEOs Form 941.  Finally, in order to prevent multiple filings, it is possible that a PEO may establish deadlines for clients claiming the ERTC and impose an administrative fee associated with processing the ERTC for former clients or clients seeking to claim the credit outside of specified time frames.

For more information about the ERTC, please contact your PEO service provider.

Paycheck Protection Program Document Checklist and Certifications

Resource:

ERTC Video Explainer

Silver Linings Pandemic Playbook  – American Benefits Council

 

Learn how our PEO Partnership can help your group please contact us at info@medicalsolutionscorp.com or (855)667-4621.

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2021 Dollar Limits

2021 Dollar Limits

The IRS & SSA announced the 2021 dollar limits for various benefits and compensation levels for retirement plans and IRAs. There are incremental changes but nonetheless worth bookmarking.

 

The contributions and retirement benefits for qualified retirement plans and individuals. Retirement Arrangements (IRAs) are subject to certain limits that are adjusted by the Secretary of the Treasury annually subject to cost-of-living. Highlighted below are the various 2020 and 2021 limits that impact IRA and retirement plans.

 

Compensation Limits

 

 

 

2020

2021

Compensation Limit

285,000$$290,000

Defined Benefit §415 Limit

$230,000

$230,000

Defined Contribution §415 Limit

$57,000$57,000

Key Employee Officer

$185,000$185,000

Highly Compensated Employee

$130,000$130,000

Governmental. Plan Compensation

Limit

$425,000$435,000

ESOP §409(o) Limits

$1,150,000

$230,000

$1,165,000

$230,000

 

 

 

Deferral and Catch-up Contribution Limits

 

 

2020

2021

401(k), 403(b), 457(b) Nan Deferral. Limi

$19,500$19,500

401(k), 403(b), Governmental. 457(b) Catch-up Limi

$6,500

$6,500

SIMPLE Plan Deferral Limi

$13,500$13,500

Key Employee Officer

$185,000$185,000

SIMPLE Plan Catch-up Limit

$3,000$3,000

 


IRA Limits

 

The limit on contributions to a traditional. or Roth IRA will remain unchanged in 2021 at $6,000. The limit that applies to IRA catch-up contributions (contributions for individuals age 50 and older) remains at $1,000.

 

Social Security

 

The Social. Security Administration (SSA) announced an increase in the taxable wage base (TWB) for 2021 to $142,800 (was $137,700 in 2020). Workers pay Social. Security tax on wages up to the TWB and some retirement plans use the TWB when allocating contributions or calculating benefits.

 

HSA Contribution Limits

 

Although not a formal. retirement plan, health savings accounts (HSA) often factor into retirement savings. The IRS announced the following 2021 limits. These apply to individuals under a high-deductible-health-plan (HDHP). The minimum deductibles and maximum out-of-pocket expenses the IRS uses to define HDHPs are outlined below, as well.

 

HSA Contribution Limits

 

LimitIndividualFamily

 

 

2020

2021

2020

2021

HSA Contribution Limits

$19,500$19,500$7,100$7,200

Minimum Deductible for HDHPs

$6,500

$6,500

$2,800

$2,800

Maximum Out-of-Pocket Expense

$6,500$6,500$2,800$2,800

 

Resource:

 

 

 

 

Is your HSA compliant?  Which pre-tax qualified HSAFSAHRA spending card is right for you? Please contact our team at 360PEO (855)667-4621 for immediate answers.  Stay tuned for updates as more information gets released.  Sign up for the latest news updates.

 

The subject matter in this communication is educational only and not rendering legal, accounting, investment advice, or tax advice. You should consult with appropriate counsel or other professionals on all matters pertaining to legal, tax, investment, or accounting obligations and requirements.

 

 

 

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PPP Flexibility Act Signed

PPP Flexibility Act Signed

On Friday, June 5, President Trump signed the Paycheck Protection Program (PPP) Flexibility Act, clearing the way for more flexibility and forgiveness of the loans made through the PPP. Originally these loans, which were part of the CARES Act, were provided to help business owners cover payroll costs, rent, and utilities.

The newly enacted legislation states that:

  • Business owners now have 24 weeks to spend funds (up from eight weeks)
  • Business owners only need to spend 60% of the loan on payroll costs (down from 75%)
  • The covered period of the loan now ends December 31 instead of June 30
  • Business owners won’t have to make employer payroll tax payments through the end of 2020
  • The business will not lose any loan forgiveness eligibility if it can show that some employees declined to return to their jobs or the pre-pandemic headcount is no longer required
  • The payback period for new loan applicants has been extended from two years to a minimum of five for those not seeking, or who are ineligible, for forgiveness

If you’d like to find out more about how you can get better benefits so your employees use them when they need to, we’d like to show you how. Please contact us using form below or info@360peo.com or 855-667-4621.

The information provided on this website is intended for informational purposes only.  360PEO does not offer legal or medical guidance.  Those with legal or medical questions should seek appropriate assistance from a licensed professional.  Stay up to date by signing up for Newsletter and Coronavirus Dashboard below.

Learn how our PEO Partnership can help your group please contact us at info@360peo.com or (855)667-4621.

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Breaking: HIT and Cadillac Tax repealed

Breaking: HIT and Cadillac Tax repealed

BREAKING: HIT and Cadillac Tax Repealed

Congress has voted to fully repeal the Cadillac Tax and Health Insurance Tax  effective January 1, 2021. This means the Health Insurance Tax will still be in place for 2020 and will be gone in 2021.
 
Both unpopular taxes with bipartisan approval delayed the Cadillac Tax but put the Health Insurance Tax(HIT) back in for 2020 earlier this summer. See Cadillac Tax Out Health Insurance Tax (HIT) Back In. Below are summaries of these two taxes that are now fully repealed.
 

Whats is the Health Insurance Tax (HIT)?

Health Insurance Tax: This tax included in the Affordable Care Act (ACA) increased the cost of health care coverage for consumers and employers in every state. The ACA imposed a new sales tax on health insurance that started at $8 billion in 2014, increased to $14.3 billion by 2018, and continued to increase each year.
 
The HIT costing an estimated 2.5%-3% added surcharge or an estimated $500/family annually and $241 for Seniors. Website Stop The Hit calculates $5,000 as the average tax for a 10 man small business for example.
 

Whats is the Cadillac Tax?

The Cadillac Tax was to take effect in 2022 and had been twice delayed since its original inception scheduled for Jan 2014. This tax called for a 40% excise tax on the amount of the aggregate monthly premium of each primary insured individual that exceeds the year’s applicable dollar limit, which will be adjusted annually to the Consumer Price Index plus 1%.
 
The 40% excise tax applies to the cost of employer health plan coverage exceeding certain threshold amounts, which were originally set for 2018 at $10,200 for individuals or $27,500 for families.
 
 
Originally, the Cadillac Tax was pushed back by the behest of Unions to 2018 from the original proposed 2014 date. Most Unions with generous health care packages would not be complaint within that time frame. For average Gold Plans in regions such as NY, the widely unpopular Cadilac Tax would have been felt.
 
Learn more about how we are successfully helping navigate SMB for 20+ years. If you have any questions or would like additional information, please contact us at 855-667-4621 or info@360.com.

For information about transparency providers and new tech tools contact us at info@medicalsolutionscorp.com or (855)667-4621.

Put You & Your Employees in Good Hands

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For more information on PEOs or a customized quote please submit your contact. We will be in touch ASAP.

BREAKING: HIT and Cadillac Tax Repealed

Congress has voted to fully repeal the Cadillac Tax and Health Insurance Tax  effective January 1, 2021. This means the Health Insurance Tax will still be in place for 2020 and will be gone in 2021.
 
Both unpopular taxes with bipartisan approval delayed the Cadillac Tax but put the Health Insurance Tax(HIT) back in for 2020 earlier this summer. See Cadillac Tax Out Health Insurance Tax (HIT) Back In. Below are summaries of these two taxes that are now fully repealed.
 

Whats is the Health Insurance Tax (HIT)?

Health Insurance Tax: This tax included in the Affordable Care Act (ACA) increased the cost of health care coverage for consumers and employers in every state. The ACA imposed a new sales tax on health insurance that started at $8 billion in 2014, increased to $14.3 billion by 2018, and continued to increase each year.
 
The HIT costing an estimated 2.5%-3% added surcharge or an estimated $500/family annually and $241 for Seniors. Website Stop The Hit calculates $5,000 as the average tax for a 10 man small business for example.
 

Whats is the Cadillac Tax?

The Cadillac Tax was to take effect in 2022 and had been twice delayed since its original inception scheduled for Jan 2014. This tax called for a 40% excise tax on the amount of the aggregate monthly premium of each primary insured individual that exceeds the year’s applicable dollar limit, which will be adjusted annually to the Consumer Price Index plus 1%.
 
The 40% excise tax applies to the cost of employer health plan coverage exceeding certain threshold amounts, which were originally set for 2018 at $10,200 for individuals or $27,500 for families.
 
 
Originally, the Cadillac Tax was pushed back by the behest of Unions to 2018 from the original proposed 2014 date. Most Unions with generous health care packages would not be complaint within that time frame. For average Gold Plans in regions such as NY, the widely unpopular Cadilac Tax would have been felt.
 
Learn more about how we are successfully helping navigate SMB for 20+ years. If you have any questions or would like additional information, please contact us at 855-667-4621 or info@medicalsolutionscorp.com.

For information about transparency providers and new tech tools contact us at info@medicalsolutionscorp.com or (855)667-4621.

Put You & Your Employees in Good Hands

Get In Touch

For more information on PEOs or a customized quote please submit your contact. We will be in touch ASAP.

Cadillac Tax Out Health Insurance Tax (HIT) Back In

Cadillac Tax Out Health Insurance Tax (HIT) Back In

Last week the House voted the unpopular Obamacare Cadillac Tax to be permanently repealed 419-6. However, much like a bad cold, the Health Insurance Tax (the HIT) is back for 2020. Website Stop The Hit calculates $5,000 as the average tax for a 10 man small business for example.

Who’s affected?

No one escapes the $16 billion HIT. The return of the Health Insurance Tax (HIT) means higher costs and fewer jobs for hardworking Americans. Absent immediate Congressional action to delay the HIT, small businesses and families will face $500 on average in higher premiums for 2020. To make matters worse, the increased cost burden on small businesses from the HIT could result in the U.S. workforce being reduced by 152,000 to 286,000 jobs over a decade. Te HIT is projected to increase premiums for seniors by $241.

How much for 2020?

For Small business, this translates to an estimated 2.5%-3% added surcharge. For States like NYS where there is already approx. 16% added surcharge to high premiums, this becomes daunting.  It is no surprise the unpopular HIT was suspended. In 2017, payers escaped making $13.9 billion in payments due to the moratorium, according to a 2018 analysis by Oliver Wyman, commissioned by UnitedHealth Group.  This may have saved consumers billions on their insurance coverage.“The taxes on health insurance are non-deductible for federal tax purposes for health insurers,” the report explained.

In some states, such as Vermont, the price of insurance would have more than quadrupled. The payer trade group published a fact sheet on this. “Allowing a tax to resume in 2020 valued at an annual level of $16 billion, would saddle individual market consumers, small businesses, state Medicaid programs, and Medicare Advantage enrollees with higher health care costs,

Can this be repealed?

Relief from the health insurance tax would result in real savings to the American people. We strongly urge Congress to provide an additional two-year suspension of the health insurance tax by passing H.R. 1398.

Learn more about how we are successfully helping navigate SMB for 20+ years. If you have any questions or would like additional information, please contact us at 855-667-4621 or info@360PEO.com.

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1095B and 6055 Reporting Requirements FAQ

1095B and 6055 Reporting Requirements FAQ

1095B and 6055 Reporting Requirements FAQ

Under Obamacare, the IRS needs to know if your coverage met health care reform standards.  The 1095-B is issued by Insurers on behalf of fully insured members directly to the IRS and send members a copy.  In short you don’t have to do anything other than reviewing the info and confirming accuracy. 1095B and 6055 Reporting Requirements FAQ

The IRS will accept any number of items to prove that a member had insurance including:

  1. insurance cards
  2. explanation of benefits  statements from your insurer
  3. W-2 Form or payroll statements reflecting health insurance deductions
  4. records of advance payments of the premium tax credit
  5. other statements indicating that you, or a member of your family, had health care coverage

6055 chart

What information is on the 1095-B form?

For each person covered on your policy, the 1095-B lists:

  • Name
  • Address
  • Date of birth
  • Taxpayer identification number (most likely a Social Security number)
  • Months of coverage with us

If you are missing the taxpayer ID or Social Security numbers for anyone on your policy, the Insurer send you a letter. It’ll explain why they need the information and how to send it to Insurers  securely.

How do I know if I should get a 1095-B form?

Insuerers send you a 1095-B form if:

  • You bought your coverage directly  and did NOT go through healthcare.gov.
  • You get employer coverage and it met the health care reform standards.
6055-1095-b-logo6056-1095-c-logo
6055 Reporting on Form 1095-B6056 Reporting on Form 1095-C
Provided by Insurer for insured medical plan; by employer for a self-insured medical planProvided by applicable large employer (ALE)
Provided to each covered “responsible individual” (e.g., employee, COBRA QB, retiree)Provided to each full time employee
Provided by March 31, 2016 for coverage in prior calendar yearProvided by March 31, 2016 for coverage offered in prior calendar year
Transmitted with employer’s Form 1094-B to IRS by May 31, 2016 (June 30, 2016 if filed electronically)Transmitted with employer’s Form 1094-C to IRS by May 31, 2016 (June 30, 2016 if filed electronically)
RESOURCE:
1095-B FAQ – Oxford 1095B reform-reporting-requirements-6055-external-FAQs copy
1096-C FAQ – https://360peo.com/compliance-consulting/form-1095-c-faq/
See IRS Extends 1094 and 1095 DEADLINE – https://360peo.com/irs-extends-1094-and-1095-deadlines/

If your organization can use a helpful audit on ACA, Payroll and HR please contact us today  (855) 667-4621 or info@medicalsolutionscorp.com.

 

This communication is not intended, nor should it be construed, as legal or tax advice. Please contact a competent legal or tax professional for legal advice, tax treatment and restrictions. Federal and state laws and regulations are subject to change.