Do You Qualify for Health Care Tax Credit? IRS Worksheet Tells All

  

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If you’re a small business owner, and you provide health insurance for employees on your payroll, you may qualify for the Small Business Health Care Tax Credit. Now there’s an easy way to find out.

The IRS website features a worksheet called “3 Simple Steps” to help small employers quickly determine their eligibility for the Small Business Health Care Tax Credit. It’s well worth your time to see if you qualify: Qualified nonexempt employers can take up to 35% credit, and tax-exempt employers can take up to 25%.

The tax credit is a part of the Patient Protection Affordable Care Act signed into law in 2010. If you employ fewer than 25 full-time equivalent employees (FTEs) for a tax year, pay less than $50,000 on average for each FTE, and pay not less than 50% of the cost of health premiums in a “qualifying arrangement,” you may be eligible for the credit.

If you qualify, you can include the amount of the credit as part of the general business credit on your business income tax return. Use Form 8941, Credit for Small Employer Health Insurance Premiums.

For more background on the tax credit, read the training article “IRS Explains New Healthcare Tax Credit for Small Businesses.”