Do you own and run a small business with less than 25 full-time comparable employees where each earns less than $50,000 average annually? Do you pay, as the employer, at least 50% of your employee’s health insurance premiums? If your answer is yes to both questions, then you can put some extra cash into your pockets, as there is a tax credit that you are eligible for.
The Small Business Health Care Tax Credit is mainly aimed at helping small business owners and organizations that are exempt from paying taxes. Its main purpose is to enable eligible businesses and organizations offer for the very first time, health insurance. If you are already providing your employees with health insurance, then you can also use the credit to maintain the coverage in existence.
The IRS encourages small business employers to understand a few facts about this credit so that they don’t miss out on it when filing their returns. To begin with, eligible businesses should use federal tax Form 8941- Credit for Small Employer Health Insurance Premiums to calculate the small business heath care credit. This has to be claimed as part of the overall business credit as shown on Form 3800-General Business Credit that should be included alongside their tax returns.
Form 8941 is meant for the tax-exempt organizations to enable them work out the credit and then use Form 990-T- Exempt Organization Business Income Tax Return, Line 44f to claim it. If your earlier application to claim the credit was unsuccessful, you are encouraged to reapply in future as you might qualify then. Qualified small employers are allowed to claim the 2010-2013 credit and for two extra years from 2014.
The maximum credit set for eligible small scale employers for the tax years 2010-2013 is set at 35% of the premiums paid. Tax-exempt employers have a 25% maximum credit of the premiums paid. From 2014, the maximum credit will shoot to up to 50% of the eligible premiums that small scale business employers pay and qualified tax-exempt organizations will enjoy up to 35% of the qualified paid premiums.
For more information on the this very important tax credit, eligibility and application process, please visit the Business Health Care Tax Credit for Small Employers page on the IRS website or call the taxman. Don’t miss out on this very significant tax credit that will help ease the burden of paying health insurance premiums for your employees.