1095-C Corrections: How to Amend Errors
The 1095-C form, Employer-Provided Health Insurance Offer and Coverage, is crucial for demonstrating compliance with the Affordable Care Act (ACA)’s employer mandate. Errors on this form can lead to penalties and confusion for both employers and employees. Therefore, understanding how to correct mistakes is vital. This article provides a detailed guide to amending 1095-C errors.
Understanding the Different Types of Corrections:
There are two primary types of 1095-C corrections:
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Minor Corrections: These involve inaccuracies that don’t impact an employee’s tax filing. Examples include misspelled names, incorrect addresses, or minor typographical errors. These typically don’t require formal correction filings.
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Substantive Corrections: These involve errors that do impact an employee’s tax filing. Examples include incorrect coverage information, incorrect offer of coverage codes, or incorrect dependent information. These require filing corrected forms with the IRS and furnishing corrected copies to employees.
Steps to Amend 1095-C Forms:
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Identify the Error: Pinpoint the specific mistake on the original 1095-C. This is the crucial first step. Review employee records, payroll information, and the original form to determine the accurate information.
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Determine the Correction Type: Classify the error as minor or substantive. This dictates the necessary correction method.
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Complete Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns: When correcting substantive errors, you must complete a new Form 1094-C. In Part II, check the “Corrected” box. This form acts as a cover sheet for the corrected 1095-Cs.
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Complete Form 1095-C, Employer-Provided Health Insurance Offer and Coverage: Prepare a new, corrected Form 1095-C for each affected employee. Don’t simply correct the original form. In Part III, check the “Corrected” box. Fill out all fields with the correct information. Ensure you enter the correct “Corrected” indicator codes in Line 14 and 15 (if applicable) to specify the type of correction being made. See the IRS instructions for a list of these codes.
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Furnish Corrected Forms to Employees: Provide corrected 1095-C forms to affected employees as soon as possible. The deadline for furnishing corrected forms is generally March 2nd (or the next business day if it falls on a weekend or holiday).
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File Corrected Forms with the IRS: File the corrected Form 1094-C and all associated corrected 1095-Cs with the IRS. The deadline for filing corrected forms is typically February 28th (or the next business day if it falls on a weekend or holiday) if filing paper forms, and March 31st if filing electronically.
Tips for Avoiding Errors:
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Utilize HRIS/Payroll Software: Implement a robust HRIS or payroll software system that can automate the generation of 1095-C forms. This can significantly reduce errors.
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Regularly Review Data: Conduct frequent audits of employee and benefits data to ensure accuracy.
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Employee Self-Service: Allow employees to review their benefits information through a self-service portal. This can help catch errors early.
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Train Staff: Properly train HR and payroll staff on ACA reporting requirements and the importance of accurate 1095-C reporting.
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Consult with a Tax Professional: If you’re unsure about how to handle a specific correction or have complex reporting requirements, consult with a qualified tax professional.
Penalties for Incorrect Reporting:
Failing to file correct 1095-C forms or furnishing them to employees can result in penalties. The penalties vary depending on the type of error and the length of the delay. It’s crucial to prioritize accuracy and timely corrections to avoid these penalties.
Conclusion:
Accurate 1095-C reporting is a critical component of ACA compliance. Understanding how to correct errors is essential for minimizing penalties and ensuring a smooth tax filing process for both employers and employees. By following the steps outlined in this article, employers can effectively amend errors and maintain compliance with the ACA. Remember to consult the IRS instructions for the latest information and updates.