Employers and employees are responsible for complying with federal, state, and local tax legislation. Employers must collect taxes from employee wages and pay taxes on their own income and any other applicable business-related taxes. Employees are required to report all of their earnings annually for tax purposes.
Additionally, employers must accurately report the payroll deductions taken from each paycheck for employees to properly file their returns. Compliance with applicable laws helps ensure that everyone pays the correct amount of tax due within the prescribed timeframes.
Form 1095-C is an important part of tax compliance for both employers and employees. It provides information about the employer's health care coverage, including which months each employee was covered under a qualifying plan or program.
Employers must provide this document to all employees by January 31st of every year for them to properly prepare their returns. If any business fails to provide this to their employees, they may face penalties from the Internal Revenue Service (IRS).
What is Form 1095-C used for?
Form 1095-C is a tax form large employers use to report health insurance coverage information for their employees. It confirms the employer's compliance with the Affordable Care Act (ACA) and helps employees complete their individual tax returns regarding healthcare coverage.
Employers with 50 or more full-time employees, otherwise referred to as Applicable Large Employers or ALEs, are required to process the 1095-C tax form. These ALEs must provide the form to their employees and submit it to the IRS annually. Employees can submit this information when filing their individual tax returns, or use it as a reference document in the future. Below, you'll see what information is contained in the form and what makes it important as a reference in relation to the ACA.
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Who files Form 1095-C?
Form 1095-C is filed by employers who offer health insurance to their employees. As mentioned, the form must be completed and provided to each employee by January 31st, accurately reflecting the coverage they received during the previous tax year. Employers are also required to file a copy of this form with the IRS, which helps ensure that everyone pays their fair share of taxes owed on time.
While employers are required to file the 1095-C, employees are not required to file this form along with their tax returns. They can refer to the information in the form to help them with their filing, but actually submitting it to the IRS is not required. In many instances, it is used as a reference document only.
Note that as long as an employee’s situation fits the description above, they need to work with their employer regarding the 1095-C as instructed by the IRS. The IRS's 1095-C forms are required even for digital nomads and US foreign persons. As long as they’ve been employees for an ALE for at least one calendar month, the form 1095-C applies to them — regardless of their location or remote work status.
What Form 1095-C looks like
The 1095-C health insurance form is a two-page document with three parts (Employee and Applicable Large Employer Member (ALE) information, Information related to employer-offered healthcare coverage, and Covered individuals' information under self-insured plans). It has tables for filling out relevant data.
It also has detailed instructions to help both employers and employees understand its purpose concerning ACA requirements when filing taxes. Complete instructions for recipients are printed on the back of the form.
Download the 1095-C form here.
Information on Form 1095-C
Here is a list of the required information for each part of Form 1095-C:
Part I: Employee and Applicable Large Employer Member (ALE) information
- Employee's name, Social Security Number (SSN), and address
- ALE's name, Employer Identification Number (also known as EIN or tax identification number), contact person, telephone number, and address
Part II: Information related to employer-offered healthcare coverage
- Offer of Coverage code for each month
- Employee required contribution per month
- Section 4980H Safe Harbor or other relief codes applicable for each month
Part III: Covered individuals' information under self-insured plans
- For covered individuals, name and SSN or TIN, or if those two are unavailable, the date-of-birth
- A checklist to mark which months these individuals are covered
Reporting months from January to December are also shown in columns for all three parts above. This will provide relevant data on health insurance coverage offered by employers while ensuring compliance with ACA requirements when filing taxes.
How to file Form 1095-C
Filing form 1095-C on tax returns involves a few key steps:
- Preparation: The employer gathers necessary information about their health insurance coverage offerings and each employee's enrollment status throughout the year. This data is used to complete Form 1095-C for every full-time employee.
- Distribution: Employers must provide a copy of Form 1095-C by January 31 to all full-time employees who were employed during any month in the previous calendar year.
- Filing: Electronic filing is performed for large filers, who are employers with over 250 forms. They need to file electronically using ACA Information Returns (AIR) system by March 31st following the reporting calendar year. Paper filing is reserved for smaller filers (any employer filing fewer than 250 forms). They can choose paper filing instead of electronic submission but must submit them earlier — by February 28th, following the reporting calendar year.
- Prepare forms for all eligible employees.
- Distribute copies of completed Forms before January end.
- Submit those same documents either electronically or via paper as per requirements.
Remember that accuracy is crucial when filling out these documents since incorrect filings may result in penalties from the IRS for non-compliance with ACA regulations.
How Skuad can help you with Form 1095-C
You need to understand your duties and responsibilities regarding form 1095-C when running an organization with more than 50 employees. Of course, that’s not the only form and the only process you need to know to successfully run your company. Compliance-related processes can be unwieldy to manage — especially if you run globally distributed teams with different local labor laws and practices.
Our team can provide the information you need to properly file taxes and deal with Form 1095-C. Skuad's platform provides comprehensive global workforce solutions, including hiring, onboarding, payment, and caretaking. Let us handle navigating the complicated tax and ACA forms and processes. Reach out today!
Is 1095-C Required for 2023 Taxes?
Yes, Applicable Large Employers with 50 or more full-time employees are required to provide Form 1095-C to employees every tax year. There may be penalties and fines if businesses do not file this form.
However, employees actually do not need to wait for the 1095-C from the coverage provider or employer before filing their taxes. In fact, employees may not receive the form before they are ready to file their returns. The information contained in the form can be helpful in preparing a tax return, but ultimately, the form itself is not required to be submitted along with it.
What Is the 1095-C Form Used for?
The 1095-C form is a tax document employers send to their employees. It confirms the health insurance coverage offered to them during the year. Employees use it as proof of insurance when filing taxes and avoiding potential penalties.
Meanwhile, employers must provide the form to their full-time employees and file with the IRS under the ACA to ensure they meet reporting requirements.
How Do I Get My 1095-C Tax Form?
Employers are responsible for providing the 1095-C tax form to their employees. They typically send it by mail or electronically (via email or through an online employee portal) by January 31st of each year. ALEs should ensure the form is part of their internal tax policy. You can get a copy of the official 1095-C from the IRS.