Small Business Health Care Tax Credit

Posted in Tax News

If you are a small employer. . .

              With fewer than 25 full-time equivalent employees?
              That pays an average wage of less than $50,000 a year?
               And pays at least half of employee health insurance premiums?

                               . . .then there is a tax credit that may put money in your pocket.

Employers–including non-profit organizations–can a tax credit of up to 35% of the cost they pay toward workers’ health care premiums.

The credit can carry both back or forward to other tax years, and because the amount of the health insurance premium payments are more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

Tax-exempt employers may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability.

And finally, if you can benefit from the credit this year but forgot to claim it on your tax return there’s still time to file an amended return.

For more information, visit the health care tax credit page on the IRS website.