Health Care Tax Credit for Small Businesses
The Affordable Care Act gives certain small businesses a tax credit if they provide health insurance to their employees. Sounds too good to be true? That’s because few businesses will qualify.
For tax years 2010-2013, the maximum credit is 35% for small business employers. In general, on January 1, 2014, the rate will increase to 50%.
If a small business pays $50,000 a year toward workers’ health care premiums and otherwise qualifies for a 15% credit, then it could save $7,500. If they do this for tax years 2009-2013, that’s a total savings of $30,000.
Here’s the catch. To be eligible, the business must cover at least 50% of the cost of single (not family) health care coverage for its employees. It must also have fewer than 25 full time equivalent employees and those employees must have an average wages of less than $50,000 per year.
There are a lot of experts who predict the cost of trying to qualify and prove eligibility for the credit will outweigh the possible savings.
For more info: www.irs.gov/sbhtc.
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