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The Affordable Care Act, or Obamacare, has made just as much of an impact in the accounting world as it has politically. Tax professionals and software vendors alike have scrambled to implement processes and products in payroll processing software to ease the transition and stay on top of this fluctuating regulation. There are several key points software vendors have offered to make sure tax professionals keep their clients safe and free from costly fines.

“One very important thing to remember is that, for employers who need to comply with ACA Reporting (Obamacare), tracking employee information, as well as employee family information, is a necessity within the accounting software,” said Ken Hilton, president of Red Wing Software.

Saliterman Vic“While the ACA may be a moving target for the foreseeable future, until the law changes, employers need to comply. One example is preparing Forms 1094-C and 1095-C,” said Vic Saliterman, senior vice president of ADP Health Care Reform. “In fact, a recent ADP study showed that about 40% of organizations reported spending more time on Forms 1094-C and 1095-C than IRS estimates. And about 40% of employers handling ACA compliance internally did not meet the original deadline for distributing Form 1095-C to their employees.”

“The IRS continues to remind taxpayers who have Marketplace coverage to go to the Exchange when their income changes or when they qualify for workplace coverage, otherwise they’ll need to pay part or all of the ACA subsidy (Advance Premium Tax Credit) back,” said Mike D’Avolio, tax specialist and customer liaison with ProConnect Group. “IRS figures show 51% of filers hit the income cap and had to repay an average of $860. Taxpayers may be unaware they still had Marketplace coverage because they 1) are auto-reenrolled by Healthcare. gov or State Marketplace; 2) have a lowcost plan with no additional contribution; and 3) the subsidy is transmitted directly to health plan.”

barlow ray“A valuable function to keep in mind when it comes to accounting and payroll is to make sure the program you’re using to track FTE requirements can integrate with your payroll solution,” said Ray Barlow, vice president of Sage Accountant Solutions. “The ability to automatically track FTE requirements and determine who qualifies, then roll this information directly into an accounting solution, will eliminate the need to manually calculate and re-enter this information into existing payroll software.”

Various functions throughout the software cannot only guide clients through the process of managing government- mandated healthcare but stop them from accidentally falling into legal entanglement.

“An integrated ACA solution can help track employee work status for each month, who was offered coverage, and whether that coverage met affordability standards,” said Saliterman. “It also will ultimately provide several years of employee data which may be needed to respond to an IRS inquiry.”

“The trick comes down to whether software can organize that data in useful ways,” said Fred J. Ode, chairman and CEO of Payroll4Construction. com. “For example, measurement groups and measurement periods are a new dimension to payroll tracking brought by the ACA. Users need to be able to define and control these easily so they can track eligibility without resorting to complex spreadsheets or guestimates.”

“For individuals, the tax return implications of the passage of Affordable Care Act are extensive, and software packages are critical for reporting the new requirements accurately,” said Mark Luscombe, JD, LLM, CPA, principal federal tax analyst at Wolters Kluwer Tax and Accounting. “Increased taxes reported on Form 8959, Additional Medicare Tax, and Form 8960, Net Investment Income Tax, calculate the additional tax automatically, with Form 8960 including an allocation of state tax payments to net investment income to reduce the taxpayer’s net investment income tax.”

“Forms 1094-B and 1094-C and Forms 1095- B and 1095-C to employees— the disbursement date has been extended to March 2, 2017,” said James Paille CPP, director of operations for Thomson Reuters myPay Solutions. “The date for forms filed to the IRS on the AIR system is still March 31, 2017.

“The ACA as we know today will change (specifics to be determined). Will 1095 forms cease? More than likely, and it’s unknown what will replace them. One thing is certain—the 2018 Trump budget proposal, which will come out in early spring 2017, will be eye-opening.”

Much possibility looms with a new president in office. This possibility will require flexibility from both tax professionals and software.

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