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Small Business Health Care Tax Credit

The information below provided by the IRS summarizes the Small Business Health Care Tax Credits and the eligibility requirements.  Please take a moment to review the content and see if your business qualifies.  Feel free to also contact us with any questions.

Small Business Health Care Tax Credit:

IRS Offers Guidance on Tax Credits in Health Reform Law

Health coverage legislation enacted this year includes a Small Business Health Care Tax Credit to help small businesses and small tax-exempt organizations afford the cost of covering their workers.

Eligibility Rules

Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.

Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).

Average annual wage. A qualifying employer must pay average annual wages below $50,000.

Both taxable (for profit) and tax-exempt firms qualify.

Amount of Credit

Maximum Amount. The credit is worth up to 35 percent of a small business’ premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).

Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Three Simple Steps for Employers to Qualify

To determine if your small business or tax exempt organization qualifies for the Small Business Health Care Tax Credit, follow the three simple steps on the IRS fact sheet.

Examples

Scenarios illustrate how the credit applies to employers in different circumstances.

Questions and Answers

Need more detailed information? Visit the IRS FAQ page.

For More Information

News release IR-2010-38, New for 2010: Tax Credit Helps Small Employers Provide Health Insurance Coverage, gives a description of the credit and when and how to claim it.

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		<font style="font-size: 14pt; color: rgb(0, 51, 102);"><span style="font-weight: bold;">IRS Offers Guidance on Tax Credits in Health Reform Law</span></font><br /><b style="color: rgb(0, 51, 102);">April 16, 2010</b></font></td></tr></table>
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		<div><span style="color: rgb(0, 0, 0);">The information below is provided by the IRS and summarizes the Small Business Health Care Tax Credits and the eligibility requirements.&nbsp; Please take a moment to review the content and see if your business qualifies.</span><br /></div></font></td></tr></table>
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	<table style="margin-bottom:6px;margin-top:6px;" border="0" width="100%" cellpadding="5" cellspacing="0" id="content_LETTER.BLOCK4"><tr><td style="color:#333333;font-family:Arial,Helvetica,sans-serif;font-size:10pt;" styleclass="style_MainText" rowspan="1" align="left" colspan="1"><font color="#333333" size="2" face="Arial,Helvetica,sans-serif" style="color:#333333;font-family:Arial,Helvetica,sans-serif;font-size:10pt;">
		<div style="color:#000000;font-family:Arial Narrow,Arial MT Condensed Light,sans-serif;font-size:10pt;" styleclass="style_SubheadingText"><font color="#000000" size="2" face="Arial Narrow,Arial MT Condensed Light,sans-serif" style="color:#000000;font-family:Arial Narrow,Arial MT Condensed Light,sans-serif;font-size:10pt;"><b><font style="font-size: 14pt; color: rgb(0, 51, 102);">Small Business Health Care Tax Credit</font></b><img src="http://ih.constantcontact.com/fs066/1102184430535/img/49.jpg?a=1103308666631" name="ACCOUNT.IMAGE.49" width="180" temptitle="Edit Image" border="0" alt="Tax Credit" align="right" title="Edit Image" height="119.7"><b><br /></b><br /></img></font></div>
		<span style="color: rgb(0, 0, 0);">Health coverage legislation enacted this year includes a Small Business Health Care Tax Credit to help small businesses and small tax-exempt organizations afford the cost of covering their workers.</span><br /><span style="color: rgb(0, 0, 0);"><br /></span><div><span style="font-weight: bold; color: rgb(0, 51, 102);">Eligibility Rules</span><ul style="color: rgb(0, 0, 0);"><li>Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.</li></ul><ul style="color: rgb(0, 0, 0);"><li>Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).</li></ul><ul style="color: rgb(0, 0, 0);"><li>Average annual wage. A qualifying employer must pay average annual wages below $50,000.</li></ul><ul style="color: rgb(0, 0, 0);"><li>Both taxable (for profit) and tax-exempt firms qualify.</li></ul><span style="font-weight: bold; color: rgb(0, 51, 102);">Amount of Credit</span><br /><ul style="color: rgb(0, 0, 0);"><li>Maximum Amount. The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).</li></ul><ul style="color: rgb(0, 0, 0);"><li>Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers. <br /></li></ul><br /><span style="font-weight: bold; color: rgb(0, 51, 102);">Three Simple Steps for Employers to Qualify</span><br /><span style="color: rgb(0, 0, 0);">To determine if your small business or tax exempt organization qualifies for the Small Business Health Care Tax Credit, follow the three simple steps on the </span><a style="color: rgb(0, 51, 102); font-weight: bold; text-decoration: underline;" rel="nofollow" track="on" shape="rect" href="http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf" linktype="link" target="_blank">IRS fact sheet</a>.<br /><span style="color: rgb(0, 51, 102); font-weight: bold;">Examples</span><br /><span style="color: rgb(0, 0, 0);">Scenarios illustrate <a style="color: rgb(0, 51, 102); font-weight: bold; text-decoration: underline;" rel="nofollow" track="on" href="http://www.irs.gov/pub/irs-utl/small_business_health_care_tax_credit_scenarios.pdf" shape="rect" linktype="link" target="_blank">how the credit applies to employers in different circumstances</a>.</span><br /><span style="color: rgb(0, 0, 0);"><br /><span style="font-weight: bold; color: rgb(0, 51, 102);">Questions and Answers</span></span><br /><span style="color: rgb(0, 0, 0);">Need more detailed information? <a style="color: rgb(0, 51, 102); font-weight: bold; text-decoration: underline;" rel="nofollow" track="on" href="http://www.irs.gov/newsroom/article/0,,id=220839,00.html" shape="rect" linktype="link" target="_blank">Visit the IRS FAQ page</a>.</span><br /><br /><span style="color: rgb(0, 51, 102); font-weight: bold;">For More Information</span><br /><span style="color: rgb(0, 0, 0);">News release <a style="color: rgb(0, 51, 102); font-weight: bold; text-decoration: underline;" rel="nofollow" track="on" href="http://www.irs.gov/newsroom/article/0,,id=220848,00.html" shape="rect" linktype="link" target="_blank">IR-2010-38</a>, New for 2010: Tax Credit Helps Small Employers Provide Health Insurance Coverage, gives a description of the credit and when and how to claim it.</span><br /></div></font></td></tr></table>
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