According to Zane Benefits’ website, if a business has less than 50 employees, the mandate and tax penalty does not apply to the small business.
How the IRS Defines “Applicable Large Employer”
According to Zane Benefits’ website, for the majority of businesses calculating whether the business is an applicable large employer is a simple calculation. However, for businesses on the border with many part-time or seasonal employees, the calculation will be more in-depth. In general, if the business employed an average of 50 or more full-time equivalent (FTE) employees during the previous calendar year, the business is considered an applicable large employer for the current year.
First, a business is defined as an applicable large employer on a calendar-year basis. For example, a business could be an applicable large employer in 2015, but not in 2014. Did the business employ 50 or more full-time employees on average during the preceding calendar year? If yes, then the business is an applicable large employer for the current calendar year.
Second, the business is NOT an applicable large employer if the business employed less than 50 full-time employees on average during the previous calendar year, or the business employed more than 50 full-time employees no more than 120 days during the previous calendar year due to a seasonal workforce.
Calculating Full-Time and Part-Time FTEs
According to Zane Benefits’ website, for the purposes of determining whether a business is an applicable large employer, a business must include all full-time employees plus the full-time equivalent of part-time employees. A full-time employee is defined as working on average at least 30 hours of service per week in a given month.
Next, a business factors in part-time employees. To calculate the full-time equivalent of part-time employees, add the number of hours worked by part-time employees in a given month and divi
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