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Don’t Miss Out on the Small Business Health-Care Tax Credit

  Sanjiv Gupta CPA  Published 
Don’t Miss Out on the Small Business Health-Care Tax Credit

I am sure you won’t mind taking some more business tax credits.   Here is another tax credit, if you are a small business employer with less than 25 employees who are earning an average wage of less than $50,000 a year and you pay at least 50% of the employee’s insurance premiums.

This tax credit is targeted towards tax-exempt organizations and small businesses.  This credit allows small business owners to offer health insurance for the first time.

Here is the scope of health insurance tax credit:

  • You take this credit as part of the general business credit.  You can use the form 3800 and any unused general Business Credit would be included with the tax return.  This unused credit can be carried back one year and then forward for up to 20 years.
  •  You must have less than 25 full-time employees.  The number of employees is calculated by calculating total number of hours and the total number of employees.
  • The average annual wage should also be less than $50,000.  Once again, this is calculated based upon FICA wages and the total number of full-time employees.
  • The tax credit is for Small Business Owners or Tax-Exempt Organization.
  • Businesses who can’t take credit for 2011 may be eligible to take advantage in future years.  Small employers can claim this credit between 2010 to 2015.

Now the question you are waiting for, How much tax credit?

The maximum credit for small business employers is 35% of premiums paid.  For tax-exempt employers, the maximum tax credit is 25% of premium paid.

Want more good news?

Beginning in the year 2014, the tax credit will go up to 50% of premiums paid and 35% for tax-exempt organizations.

Please note tax credit is on the amount you pay for health care premiums.  Credit is not on employee-paid premiums.   With up to 50% tax credit, I am sure you would love to offer healthcare for your employees.

Want to take credit this year? Call our office for an appointment.