2016 Tax Code Changes: Important End-of-Year Information

Important messages about tax code changes – Action needed soon to take advantage of the update!

Two recent changes to the tax regulations may have an effect on your 2016 taxes that require action before December 31, 2016 to get the benefit.

In preparing your return for 2015, we discussed the Affordable Care Act (ACA or “Obamacare”) rule that affected your ability to have your company reimburse you or pay directly for your health insurance in 2016. The recent signing of the “21st Century Cures Act” as well a recent revision to prior guidance have provided clarity on the options available for 2016 and 2017. These changes make it possible for you to take certain health insurance related deductions as the owner of your business.

Doing so will likely mean that you need to take action before the end of the year, and which will include adjusting the W2 wages shown for you. Please be sure this issue is addressed with your payroll provider before year end. Please note that we are not just talking about accounting gimmickry – with owner reimbursements, funds should actually move between the company, and these changes need to be made before the end of the year for the deduction to apply in 2016.

***To clarify any questions you may have, or if you need assistance in having the conversation with your payroll people or having us help review their work – then please do call us ASAP as time is getting short.***

Going forward, the Cures Act also removes ACA-related penalties associated with Health Reimbursement Accounts (HRAs) in certain situations, and for certain employers. Those of you that had HRAs and were forced to end them due to the ACA may want to reconsider that decision now for 2017.

Lastly, the deadline for filing ALL W2s and 1099s has been accelerated starting with the 2016 filing due in January. These forms are now all due on January 31st, 2017, including the filing copies sent to the IRS or the Social Security Administration. Please plan accordingly, and of course if we’re helping you with that process please know that this means we will need to start earlier than in years past as there is no longer the opportunity to push any of that effort past the end of January.

Because every person is different, it’s critical that we review and discuss your situation with you personally before saying with certainty that any of this info would help or even affect you.  This post is meant to let you know that some last minute action at the end of the year may help – if you’d like to have that conversation please call us.

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