Requests from small business owners and tax professionals to the IRS for simplified procedures have been approved and are in effect for the 2014 tax season, providing several benefits to small businesses this tax season.
One substantial update was in Revenue Procedure 2015-20, allowing small businesses to make a change in methods of accounting under the final tangible property regulations, beginning on or after January 1, 2014. This procedure is generally available to small businesses with assets totaling less than $10 million or average annual gross receipts totaling $10 million or less (IRS, 2015-29, 2015).
The IRS also waived the requirement to complete and file Form 3115 if the business chooses to use Revenue Procedure 2015-20 (IRS, 2015-29, 2015).
The other major change recently made by the IRS is a provision in Obamacare allowing eligible small businesses a small tax break if they provide health care to their employees.
The following tax credits could affect your small business (IRS, Health Care Tax Tip 2015-13, 2015):
- Credit percentage increased from 35 percent to 50 percent of employer-paid premiums; for tax-exempt employers, the percentage increased from 25 percent to 35 percent.
- Small employers may claim the credit for only two consecutive taxable years beginning in tax year 2014 and beyond.
- For 2014, the credit is phased out beginning when average wages equal $25,400 and is fully phased out when average wages exceed $50,800. The average wage phase out is adjusted annually for inflation.
- Generally, small employers are required to purchase a Qualified Health Plan from a Small Business Health Options Program Marketplace to be eligible to claim the credit. Transition relief from this requirement is available to certain small employers.
The IRS suggests having this information compiled and prepared prior to completing Form 8941, Credit for Small Employer Health Insurance Premiums (IRS, Health Care Tax Tip 2015-13, 2015):
- SHOP QHP documentation or letter of eligibility from SHOP, unless transition relief applies
- Numbers of full-time and part-time employees and numbers of hours worked
- Average annual wages for employees
- Employer premiums paid per employee, if applicable
- Relevant K-1s and other pass-through credit information
- Cost of coverage for each employee
- Payroll tax liability – for tax-exempt organizations only
- Pass-through credit info – for K-1s of other small employers
For more information about the Affordable Care Act and filling your 2014 income tax return, visit www.irs.gov/aca or contact your LGT professional or reach us at email@example.com.
Seek the services of a legal or tax adviser before implementing any ideas contained in this blog. To reach a financial advisor at Lane Gorman Trubitt PLLC, call (214) 871.7500 or email firstname.lastname@example.org.
IRS. (2015, February 13). IR-2015-29. Retrieved from IRS: http://www.irs.gov/uac/Newsroom/IRS-Makes-it-Easier-for-Small-Businesses-to-Apply-Repair-Regulations-to-2014-and-Future-Years
IRS. (2015, February 26). IRS Health Care Tax Tip 2015-13. Retrieved from IRS: http://www.irs.gov/Affordable-Care-Act/Individuals-and-Families/Changes-to-Small-Business-Health-Care-Tax-Credit