The IRS has recently changed how and when businesses must report 2022 ACA forms to their employees in the tax year 2022 and beyond. IRS Extension for Delivery of Employee Forms According to recent guidance from the IRS, applicable large employers (or ALEs) must file their 2022 ACA 1095 forms by the following deadlines: 1095 forms must be delivered to employees by March 2, 2022 (automatic extension given – the original deadline was January 31, 2022) Paper filing with IRS must be done by February 28 Electronic Filing with IRS must be completed by March 31, 2022. If your business needs an extension, you must submit Form 8809 (Application for Extension of Time to File Information Returns) by the filing due date. This must be done by any employer with federal contractors, self-insured employers, and any employer with more than 50 employees. The automatic extension mentioned above for businesses to deliver 1095s to employees is an automatic one. It is in effect for all employers and looks to be carried forward year over year, starting in tax season 2022. It’s important to note that many employers are still choosing to send the 1095 forms out with W-2s to employees to avoid missing the separate deadline and fielding questions and concerns from employees who are waiting for their forms. Business Requirements for ACA Form 1095 The IRS shared guidance on the compliance and reporting of Affordable Care Act information. ALEs must offer affordable minimum essential coverage that provides minimum value to full-time employees. If not, they'll incur an employer shared responsibility payment to the IRS. There are helpful examples and payment situations laid out at this link for your further reference. Penalty Relief Has Ended Between 2015 and 2020, the IRS offered penalty relief for employers that reported incorrect or insufficient information when filing ACA forms. But beginning with the plan year 2021 health insurance coverage (which is reported …
Indirect Taxes & Your Business
Let’s discuss the impact and implications of indirect taxes on your organization. Direct vs. Indirect Taxes Before we talk about how indirect taxes shape businesses, let’s break down the difference between direct taxes and indirect taxes. According to the IRS, “a direct tax is one that the taxpayer pays directly to the government. These taxes cannot be shifted to any other person or group. An indirect tax is one that can be passed on – or shifted – to another person or group by the person or group that owes it.” Examples of direct taxes include things like income taxes, property taxes, and taxes on assets. Indirect taxes include things like sales tax, value-added tax, and other excise duties, where a tax is collected by the seller but paid by the buyer. Most indirect taxes are paid by consumers, not by the supplying business. The Impact of Indirect Taxes Indirect taxes are often used by governments to encourage – or discourage, in the case of sin taxes – certain behaviors in consumers. For example, taxes imposed on items being imported can help push US consumers to think more carefully about buying American-made products. These products are often cheaper because the extra indirect tax does not apply to them. This, of course, depends on the costs associated with making and shipping a product within the US versus from country to country. Indirect taxes also allow businesses to allocate certain financial burdens, operations, and cost analysis away from the business itself and onto your customers, easing your financial burdens and increasing revenue. But the digital transformation that has been in the works for years before COVID is going to create a lot of new obstacles and opportunities. The Emergence of NFTs Non-fungible tokens are becoming more and more popular, as is cryptocurrency. NFTs are unique digital assets whose ownership is demonstrated and verified via DLT (distributed ledger technology). Because NFTs are difficult to classify, they are …
Mortgage Interest & Taxes in 2022
The latest version of Form 1098 is available from the IRS for tax season 2022. Get to Know Form 1098 There are seven different types of 1098 forms, but the one we wanted to talk about today is the original, the plain 1098. Form 1098 is used to help report mortgage interest. The last year or so has seen a tumultuous housing market, with home prices rising to astronomical prices due to drastic upticks in demand and inflation. Mortgage interest deductions, like those categorized and reported on form 1098, are not all-encompassing. The IRS defines mortgage interest as interest that is accrued from a loan that originates on your primary or secondary home. A mortgage interest that qualifies for deduction includes: Any interest on your home, which is defined as a property that includes sleeping, cooking, and eating facilities: house, condo, co-op, mobile home, boat, or recreational vehicle Interest on a second home that is not being rented out (there are specific guidelines for those who rent their homes seasonally and in other piecemeal situations Most mortgage insurance premiums Late payment fees Prepayment penalties Points Home equity loans and home equity lines of credit: if you took out a home equity loan to finance a remodel (a common occurrence with the rise of COVID and the work-from-home boom), you can deduct interest on the amount you used for the renovation Unfortunately, there are several things that are not deductible when you file a 1098, including mortgage interest on a third or fourth home, reverse mortgage interest, homeowners’ insurances, appraisal and notary fees, down payments, closing costs, home equity loans, and equity loan funds that were not used on the property. If you worked from home last year, you’ll have to get measurements and do some calculations because you can claim the space in your house that was used for living, but not the space you used for work (this is the opposite of a home office …