BUCKHANNON — Tax time is here for both individuals and businesses.
Sam Sedosky Jr., a certified public accountant, gave members of the Buckhannon-Upshur Chamber of Commerce a small business tax update Monday.
Sedosky bought Richard Trent’s firm when Trent retired, changing the name to Sedosky and Associates PLLC.
The Affordable Care Act mandates that businesses with more than 50 employees offer health care.
“If you have over 50 employees, you are required to offer affordable health care,” Sedosky said. “That doesn’t mean that you have to provide and pay for all of that health care, but you do have to offer it so the employee can obtain the health care.”
There are penalties for non-compliance, but that might change as congress considers changing the health care law.
“The penalties that are in place in 2016, they have a very high assurance they won’t be in place in 2017,” Sedowsky said.
With the ACA, there comes additional filing requirements at tax time.
For businesses with one to 49 employees, offering insurance is not required.
However, Sedowsky said there are tax credits available for those businesses who choose to offer health insurance and pay at least 50 percent of that health insurance.
“The credits are due to expire this year,” he said.
The credits come with caveats.
For example, if a person’s income is over $26,000, they may not be eligible.
That credit is only available for two consecutive years.
“The good thing about this is those deductions are what they call above the line,” he said. “They are on Page 1 of your 1040. You always want deductions. If you can get them on Page 1 of your return, that is where we want them because that deduction carries over to our state return.”
Sedowsky said it appears President Donald Trump’s health care proposal would retain aspects of the ACA, such as rules preventing discriminating against pre-existing conditions and allowing children to stay on their parent’s insurance until age 26.
“With the affordable health care act, if you do not have health coverage, there are penalties involved,” he said. “I really foresee it going away. As CPAs, we are sort of the watch dog on this tax.”
“Also, with the affordable health care act, we have some subsidies available,” he said. “If it’s not affordable for you, there is government money that you can get as a subsidy.”
That money for low income workers is also expected to go away, according to Sedowsky.
Moving on, Sedowsky also touched on what he referred to as the safe harbor for capitalization of fixed assets.
“Right now, if you set a policy in place, you can expense everything up to $2,500,” he said. “Now, you have this policy in place, you just expense them off.”
For example, if someone wanted to buy five computers that cost $2,000 each and has that policy in place, instead of capitalizing that asset, it can just be put under an expense and not added to the tax return.
“It’s just a normal expense with no fixed asset,” he said.
Sedowsky said he is encouraging his clients to have such a policy in place to expense items up to $2,500.
“You just set a policy and you protect yourself,” he said.