If you’re a fan of the Affordable Care Act, you may be aware of one of its provisions which allows some small employers to claim a “Small Business Health Care Tax Credit.”
The credit was intended to encourage both small businesses and small tax-exempt organizations to offer health insurance coverage to their employees for the first time, or to maintain coverage (expensive as it may be) already in place.
Generally, the credit is available to small employers that pay at least half of the premiums for single health insurance coverage for their employees. It is mainly intended to help small businesses and tax-exempt organizations which employ moderate and lower income workers.
Small businesses can claim the credit for 2010 through 2013 and for any two years after that. For tax years 2010 to 2013, the maximum credit is 35% of premiums paid by eligible small businesses, and 25% of premiums paid by eligible tax-exempt organizations.
The maximum amount of the credit can be realized by the smallest of employers – those with ten or less full-time equivalent employees, to whom average annual wage payments total $25,000 or less. The credit is completely phased out for employers which have 25 or more full-time equivalents, or which pay average wages of $50,000 or more per year per person.
Check out Form 8941, Credit for Small Employer Health Insurance Premiums if you might qualify.