During 2010, Congress passed the Small Business Health Care Tax Credit. If you pay more than 50% of your employees' health care coverage you may be entitled to this tax credit.
Although the rules state you must employee 25 or less employees and the average annual salary must be less than $50,000, don't assume you don't qualify simply because you employ more than 25 people or you think your average salary is above the limit. The calculation of number of people employed is based upon full time equivalents (FTEs) and certain types of employees are exempted from the calculation. So, if there is a chance you may qualify, complete the census data form and let us make the calculations for you.
For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by small businesses and 25% of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum credit will increase to 50% and 35% of premiums paid by small businesses and tax-exempt organizations, respectively.
If you did not pay over 50% of health insurance for your employees in 2010, there is no need to complete the worksheet. However, you may find it useful to use the worksheet as a planning tool for future years to determine if it is worth-while to begin paying more than 50% of health insurance premiums for your employees.
Please feel free to call us if you have any further questions in regards to this new legislation.
