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Increased Penalties for No Medical Coverage on 2016 Returns

October 24, 2016


Personal returns: increase in Individual Responsibility Payment for 2016:


  • 2.5% of household income above filing threshold or $695 per adult/$347.50 per child under 18 up to $2,085 family maximum.

  • The IRS will begin rejecting any 2016 Form 1040’s that are “silent” for information related the Individual Mandate: Box 61 is not checked indicating full year coverage, Forms 8965 and 8962 are not included with return, indicating an exemption applies, a premium tax credit was reconciled or a penalty payment is made.

Business returns: who will owe an Employer Shared Responsibility Payment for 2016?

  • Employers with 50 or more full-time employees (FTE) or equivalents (FTEE) in 2015 who do not offer minimal essential coverage that is affordable to at least 95% of its FTE/FTEE and their dependents in 2016 and one of those FTE receives a premium tax credit (PTC).

  • Annual penalty amounts increase from $2,000 to $2,160 for failure to offer coverage and $3,240 for unaffordable coverage, up from $3,000.

  • Under the provisions of the ACA, Health & Human Services (HHS) is required to send all employers, regardless of size, a notification if an employee received a Premium Tax Credit (PTC) when they filed their personal tax returns. For large employers, those with 50 or more FTE/FTEE, this notice serves as an advance warning that an employer shared responsibility payment my be assessed. Small Employers, with fewer than 50 full-time employees, can simply ignore the notice.

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