Click on the links below to jump to each section in this article:
- Health Coverage Terms Employers Should Know
- Final Regulations for 100 Percent Bonus Depreciation
- Avoid Refund Delays by Renewing Expiring ITINs Now
- File Cash Transaction Reports Electronically
Health Coverage Terms Employers Should Know
Under the Affordable Care Act, certain employers – known as applicable large employers – are subject to the employer shared responsibility provisions. You might be thinking about these topics as you make plans about 2021 health coverage for your employees.
If you are an employer that is subject to the employer shared responsibility provisions, you may choose either to offer affordable minimum essential coverage that provides minimum value to your full-time employees and their dependents or to potentially owe an employer shared responsibility payment to the IRS.
Here are definitions of key terms related to health coverage you might offer to employees:
Affordable coverage: If the lowest cost self-only only health plan is 9.5 percent or less of your full-time employee’s household income, then the coverage is considered affordable. Because you likely will not know your employee’s household income, for purposes of the employer shared responsibility provisions, you can determine whether you offered affordable coverage under various safe harbors based on information available to you as the employer.
Minimum essential coverage: For purposes of reporting by applicable large employers, minimum essential coverage means coverage under an employer-sponsored plan. It does not include fixed indemnity coverage, life insurance, or dental or vision coverage.
Minimum value coverage: An employer-sponsored plan provides minimum value if it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan.
Please call if you have any questions or need more information about the employer shared responsibility provisions.
Final Regulations for 100 Percent Bonus Depreciation
Final regulations have been issued by the Treasury Department and the Internal Revenue Service implementing the 100% additional first-year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the business.
The 100% additional first-year depreciation deduction was created in 2017 by the Tax Cuts and Jobs Act and generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances, and furniture generally qualify. While the bonus depreciation has been around for a while, the TCJA amended it to include certain used depreciable property and certain film, TV, or live theatrical productions and increased the first-year depreciation deduction to 100 percent (up from 50 percent).
The deduction applies to qualifying property (including used property) acquired and placed in service after September 27, 2017. The final regulations provide clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property.
Additionally, the final regulations provide rules for consolidated groups and rules for components acquired or self-constructed after September 27, 2017, for larger self-constructed property on which production began before September 28, 2017.
To claim the deduction, taxpayers should use Form 4562, Depreciation and Amortization (Including Information on Listed Property). For more information about this and other TCJA provisions, please call us today.
Avoid Refund Delays by Renewing Expiring ITINs Now
People who are not eligible for a Social Security number must use individual taxpayer identification numbers (ITINs) if they have tax filing or payment obligations under U.S. law. Periodically and under certain circumstances, these ITINs expire and should be renewed as soon as possible to avoid unnecessary delays related to tax refunds next year.
ITINs that expire on December 31, 2020:
- Numbers with middle digits 88
- Those with middle digits 90, 91, 92, 94, 95, 96, 97, 98 or 99, if assigned before 2013 and if not already renewed.
Affected taxpayers will receive a CP48 Notice, informing a taxpayer that the ITIN should be renewed before the end of the year. This notice explains what actions a taxpayer will need to take to renew the ITIN if it will be used on a U.S. tax return filed in 2021. If a taxpayer has an ITIN number that has already expired and expects to have a filing requirement in 2021, they can renew any time.
Taxpayers with an expiring ITINs have the option to renew them for their entire family at the same time if they have received a renewal letter from the IRS. Family members include the tax filer, spouse and any dependents claimed on the tax return.
How to renew a ITIN
To renew an ITIN, a taxpayer must complete a Form W-7, Application for IRS Individual Taxpayer Identification Number and submit all required documentation. Taxpayers submitting a Form W-7 are not required to attach a federal tax return; however, they must still note a reason for needing an ITIN on the form.
Avoid these common errors when renewing an ITIN:
- Mailing identification documentation without a Form W-7
- Missing information on the Form W-7
- Insufficient supporting documentation, such as proof of U.S. residency or documents that support name changes.
If you need assistance renewing an expiring ITIN, don’t hesitate to call.
File Cash Transaction Reports Electronically
Businesses that receive cash transactions of more than $10,000 must report these payments to the IRS. Now businesses can batch file their cash reports; this is especially helpful for those required to file many forms. Let’s take a look at several key points that taxpayers should know about reporting cash transactions.
How the IRS defines cash
Cash includes coins and currency of the United States or any foreign country. For certain transactions, it’s also a cashier’s check, bank draft, traveler’s check, or money order with a face amount of $10,000 or less.
Businesses must report cash of more than $10,000 that they receive:
- In one lump sum
- In two or more related payments within 24 hours
- As part of a single transaction within 12 months
- As part of two or more related transactions within 12 months
Reporting these payments
Taxpayers report cash payments by filing Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business.
Filing electronically is encouraged; however, to e-file, a business must have an account with the Financial Crimes Enforcement Network’s BSA E-Filing System. E-filing is free, secure, and typically a more convenient and cost-effective way to meet the reporting deadline. Filers will receive an electronic acknowledgment of each form they file. Businesses can also paper file Form 8300 and send it to the IRS at the address listed on the form.
When to file
Form 8300 must be filed within 15 days after the date the cash is received. If a business receives payments toward a single transaction or two or more related transactions, they should file when the total amount paid exceeds $10,000.
If you have any questions about reporting cash payments or need help setting up an account with the BSA E-Filing System, please contact the office.