employer shared-responsibility payment
What is the employer shared-responsibility payment?
Since 2015, employers with at least 50 full-time equivalent employees have been required to offer affordable, minimum essential coverage to their full-time employees and if it least one employee got a policy in the exchange with a subsidized premium. The annual penalty is the number of full-time employees (minus 30) multiplied by $2,000. (Additional details for calculating the penalty are here.)
It's important for the self-employed to know all the ways they can save a few dollars here and there. One obvious place to look is on their tax forms, but one look isn't enough.
How does the IRS calculate premium tax credits for self-employed people when their AGI depends on their premium amount?
For the self-employed, premiums affect modified adjusted gross income, which in turn affects premiums. But the IRS has a method for addressing this circular situation.
If an individual pays for an exchange plan, how do they pay for the premium pre-tax as would someone with an employer plan?
If you’re self-employed, you can generally deduct the full amount you pay in premiums without having to itemize your deduction.