SMALL BUSINESS HEALTH CARE TAX CREDIT

Several of our Clients have asked us to explain the Small Business Health Care Tax Credit and how they can determine if their business qualifies.  Here is our response:

Included in the Patient Protection and Affordable Care Act is a tax credit that takes effect this year.  The Small Business Health Care Tax Credit, is designed to encourage small employers (business or tax exempt) to offer health insurance coverage.  The credit is worth up to 35 percent of a small business’ premium costs in 2010.  On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).  The credit phases out gradually for compaines with average wages between $25,000 and $50,000 and for companies with the equivalent of betweeen 10 and 25 full-time workers.

Eligibility Rules

• The business must cover at least 50 percent of the cost of health care coverage for some of its workers.
• A qualified employer must have less than the equivalent of 25 full-time workers.
• A qualifing employer must pay average annual wages below $50,000.

For a fact sheet on how to determine if you business is eligible, please check out www.irs.gov/pub/irs_utl/3_simple_steps.pdf

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