The Internal Revenue Service (IRS) provided drafts that show changes to various tax forms for 2020 & 2021. Notably, IRS forms 941, 1095-C & the W-4 all have notable potential changes/adjustments.
Below are the changes included in this draft version of the 2020 Form 1095-C:
- New data fields on Form 1095-C include “Employee’s age on January 1”, zip code (primary residence or primary employment), and by month
- Part III, which for self-insured coverage lists the employee and dependents who were enrolled in coverage, is now moved to Page 3 (instructions are moved to Page 2).
- Eight new Line 14 offer codes have been created to accommodate ICHRA offers and new affordability safe harbors. Starting January 1, 2020, employers may offer employees an ICHRA instead of offering a traditional group health plan to reimburse medical expenses, like monthly premiums and out-of-pocket costs such as co-payments and deductibles. All health plans must continue to follow ACA regulations of affordability and meeting minimum value. A series of new Line 14 codes, 1L through 1Q, allows employers to report the type of ICHRA covered.
Below are the changes included in this draft version of the 2020 Form 941:
- For FFCRA wages, you will need to report qualified sick leave wages and qualified family leave wages on separate lines on Form 941.
- Enter the taxable wages for FFCRA—sick leave wages 5a(i) and FFCRA—family leave wages on separate lines. Remember the FFCRA wages are exempt from employer Social Security tax.
- Lines 11b & 11c – These amounts will come from Worksheet 1 and will report the amount of credits you have already applied against the EFTPS tax deposit for FFCRA and ERC wages.
Regular wages/Overtime: $80,000
FFCRA – Sick wages: $5,000
FFCRA – Leave wages: $5,000
Total wages: $100,000
941 Lines reporting 5a Taxable Social Security wages: $90,000
5a(i) Qualified sick leave wages: $5,000
5a(ii) Qualified family leave wages: $5,000
- Line 13b – This line helps identify to the IRS the amount your company will defer for employer Social Security tax. Remember, this deferral means you still have to pay this but at a later date. The due date for 50% of this deferral is December 31, 2021, and the remaining 50% is due December 31, 2022.
- Lines 13c & 13d – These amounts will come from Worksheet 1 and will report the amount you are requesting as a refund for the credits for FFCRA and ERC.
- Line 13f – This line is to report the dollar amount of advances that your company received from filing form 7200 for the quarter.
- For Part 3, the updates in this section come from lines 19-25. This part of Form 941 identifies wages that we are reporting and allocable health care costs that are being applied for FFCRA and ERC.
- To help understand your health care costs for reporting purposes, the IRS has a section of FAQs on how to determine the amount of allocable qualified health plan expenses.
- The basic form is to be updated with minimal changes, most of which are with regard to revising dates.
- The standard filing status deductions are yet to be released on page 3.
- The Page 4 tables with the form’s instructions are to be updated later this year. The tables are for annual taxable wage and salary amounts for a higher-paying job and a corresponding lower-paying job. The tables are listed as Married Filing Jointly or Qualifying Widow(er), Single or Married Filing Separately, and Head of Household.
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For more information, and before acting on any information contained within this article, Avionté recommends consulting with your legal counsel. This information should not be construed as, and does not constitute, legal advice.