In April, the IRS starting sending postcards to small businesses to inform them of the new Small Business Health Care Tax Credit. Even though it may seem that April is ages ago, small businesses can (and should) check their eligibility and take advantage of the new legislation!
There are four main eligibility rules:
1. A qualifying employer must cover at least 50% of the cost of health care coverage for some of its worker’s based on single rate.
2. A qualifying employer must have less than 25 full-time workers (“full-time” being the key word here. Example: an employer having less than 50 part-time workers may qualify)
3. A qualifying employer must pay average annual wages below $50,000
4. Both taxable and tax-exempt firms may qualify
The credit can be claimed as part of the general business credit starting with the 2010 income tax return to be filed in 2011. If a small business meets these requirements, it may receive a credit of up to 35% for a small business’ premium costs in 2010. As of January 1, 2014, this credit increases to 50%. (remains 35% for tax-exempt employers) Also note that the credit phases out over time for firms whose average wages fall between $25,000 and $50,000 and for firms who maintain between 10 and 25 full time workers.
Tax laws are constantly changing and new legislation is forever been put into place or repealed. As a small business owner...or any business owner...it's worth it to keep up-to-date on what you qualify for and what could help you and your business!
For more information on this and other new tax legislation visit www.irs.gov.
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