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As the end of 2011 is drawing near, now is the time to utilize a tax planning idea that can potentially save you and your business money, along with preparing you for upcoming changes in tax laws. One of these changes includes payroll reporting for 2012 wages and beyond.
The Patient Protection and Affordably Care Act sets forth new form W-2 reporting requirements relating to the cost of health insurance:
- Employers filing more than 250 form W-2s in 2013 (i.e., for 2012 wages) must report the cost of pre-tax employer-sponsored coverage of group health coverage.
- Employers filing less than 250 form W-2s are not subject to reporting until 2014 (i.e., for 2013 wages).
The Act defines employer-sponsored coverage as coverage under any group health plan, excludable from gross income except:
- Long-term care
- On-site medical clinics
- Separate dental or vision plan coverage
- Coverage that is not excludable from gross income and a deduction is not allowed
- Archer MSA, HSA, HRA, FSA (unless there is an employer match)
- Plans not subject to COBRA
- Plans primarily for military
As always, start planning early, stay in touch with your accountant and stay informed. More in depth information about this and other tax topics can be found on our website.