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New Affordable Care Act Reporting Requirements for 2024
In February of this year, the Internal Revenue Service released final rules expanding mandatory electronic filing requirements for certain employer tax information returns for 2024, including Affordable Care Act (ACA) Forms 1095.
The prior rules allowed employers to file certain tax information returns with the IRS by paper, including Forms 1095, as long as they were not filing more than 250 of the same return. E-filing was required for employers filing more than 250 of the same return. Employers were not required to aggregate different returns to satisfy the 250-return threshold for e-filing. For example, employers required to file 300 Forms W-2 and 100 Forms 1095-C with the IRS were only required to file Forms W-2 electronically with the IRS. They could still file Forms 1095-C in paper format since they were not filing more than 250 Forms 1095-C.
The final rules will require employers to file their Forms 1095 electronically if they file at least 10 returns in 2024 for the 2023 taxable year. Additionally, employers will be required to aggregate their information returns to determine whether they satisfy the 10-return threshold for e-filing. This means employers will be required to aggregate their Forms 1095s, Forms 1099, and Forms W-2 (along with the other tax information returns subject to these final rules) to determine their 10-return threshold for mandatory e-filing with the IRS. These different forms will not be filed together but must be counted together to determine whether the new 10-count threshold is met.
Whether employers work with a third-party vendor or do the reporting themselves, planning will need to begin now to submit the forms electronically in 2024. The e-filing threshold change from 250 to 10 returns will primarily affect those employers who are Applicable Large Employers (ALEs) under ACA rules, but still under 250 employees. These ALEs will be now be required to file the forms electronically in 2024 for the 2023 taxable year.