A lot of others are talking about whether the US should have, and can afford to have, health care for everyone. It’s a hotly debated issue. I’m not talking about that aspect today.
I want to talk about what this means for you, the business owner.
If you have over 50 full-time equivalents, you will need to provide health care for your employees. If you don’t have any employees, or less than that number, you still have to buy health care at least for yourself. If you don’t you’ll pay a fine, now called a tax. It doesn’t look like that tax will be deductible, but at this point, we don’t know.
If you decide to provide health care for your employees, even if you are not required to, you will get a deduction. You may or may not get a deduction for the cost of your personal health care. That will be determined by the type of business structure you have.
There is one more wrinkle. That’s the concept of “50 full-time equivalents”. If you have 101 half-time employees, you have more than 50 FTEs and so need to provide insurance. It gets more complicated though, if the equivalents have more than one job. And having 101 half-time employees means you’re paying 101 times worth of health insurance. Does it also mean you’re paying 101 times worth of a penalty or is it just 50 times, equivalent to 50 FTEs if you don’t provide the insurance?
There is still a tax break for anyone providing health insurance who has fewer than 25 employees. But insurance you provide for you and your family doesn’t count.
And, there are still the new taxes: (1) Additional surtax if your wages are over $250K ($200K if single), (2) 3.8% passive income tax if you make over $250K ($200K if single) and have passive income such as rents, royalties and capital gains.
And they are hiring 16,000 more IRS agents.
We’ll keep you posted on clarification on these rules as they occur. If you’re interested in my general soap box on this all, please go to DianeKennedyCPA.com