This article was updated on 12/8/2015 to reflect current figures.
Did you know you can get a tax credit for adding employee health coverage to your payroll program? If you’re a small business owner and provide health insurance to your employees, you may qualify for the Small Business Health Care Tax Credit. Do you know if you qualify? Healthcare.gov provides an easy way to find out.
It’s worth your time to see if you qualify. Qualified employers can take up to 50% credit, and tax-exempt employers can take up to 35%.
The tax credit is a part of the Affordable Care Act (ACA). The ACA sets standards for employers to offer insurance to employees. The standards vary based on how many employees you have.
If you have 50 or few employees you do not have to offer insurance. You can choose to offer coverage.
Do you offer health care coverage to your employees? You may be eligible for the tax credit 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
- pay no less than 50% of the premium costs in a qualifying arrangement
- offer insurance through the Small Business Health Options Program (SHOP) Marketplace
If you qualify for the credit, you can include the amount as part of the general business credit on your business income tax return. Use Form 8941, Credit for Small Employer Health Insurance Premiums to claim your credit.
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