You don’t have to work at a CPA firm in Santa Rosa to know that the past few months have seen major upheavals when it comes to US tax law. Multiple new laws, including a new set of tax rules as well as substantial changes to the Affordable Care Act (ACA), have left businesses across America scrambling to understand how it all impacts their employee benefits.
We’ve been following these issues closely here at Montgomery Taylor. While it’s best if you contact a CPA firm in Santa Rosa directly for personalized insights into your situation, here are some of the most important takeaways.
Four Things You Must Know About How Recent Tax Laws Have Affected Employee Benefits
1 – The Individual Mandate Repeal Does NOT Affect the Employer Mandate
This is one of the biggest misconceptions we’ve seen regarding recent changes to the ACA. The mandate for individuals to carry insurance has been lifted, but it did not change the mandates in place for large employers. If you were previously mandated to offer ACA-based coverage, that still holds true.
2 – No more deductions for employee commuting benefits
Previously, companies could get a tax deduction for offering a subsidy encouraging employees to take mass transit. That deduction is eliminated. The only exception is the rare case where employee safety is a factor.
3 – Fewer meal deductions
If you were accustomed to “wining and dining” potential clients or employees, and deducting those expenses, you will have to change your dining habits. Nearly all deductions for business entertainment expenses have been removed, including meal deductions. You can still receive deductions for offering on-site dining, although that deduction is slated to sunset in 2025 unless something changes.
4 – New Family and Medical Leave Tax Credits
One piece of good news is that you can now receive a tax credit on wages whenever an employee makes use of the Family and Medical Leave Act. This begins at 12.5% for companies paying at least half wages and can go up to 25% for those paying full wages to employees on FMLA leave.
Get the Quality Financial Insights You Need
It can be difficult for anyone to keep up with the back-and-forth legislation coming out of Washington. If you are in need of quality advice and financial planning, contact Montgomery Taylor – a quality CPA firm in Santa Rosa.