Many business owners are confused about the Small Business Health Care Tax Credit and not without reason! The IRS has released a lot of information on the credits, who qualifies, and even an estimator to determine how much you qualify for.
If you qualify, you are able to retroactively claim the credit from 2010 through 2013 and then for 2014 and 2015. For the retroactive claims, the maximum credit is 35% of premiums paid, while for tax-exempt organizations, it’s 25%. 2014 will see an increase of 50% for small businesses and 35% for tax-exempt organizations.
The main requirements to get a credit are: 1) You must pay at least half the premiums for your employees (not their families) or 35% for tax-exempt organizations, 2) You have few than 25 full-time employees for the tax year, 3) Your average annual wages for those employees is under $50,000 for that tax year, and 4) the insurance is purchased through the exchange. Even if your organization doesn’t owe taxes, you are still eligible to receive the credit as a refund if it doesn’t exceed income tax withholding and Medicare tax liability.
There are some big deadlines coming up for different businesses if you are participating:
- March 17th: Corporations & S Corporations
- April 15th: Partnerships and individuals
- May 15th: Tax Exempt Organizations
If you aren’t able to meet the deadline, don’t forget to file an extension!
- IRS Encourages Small Employers to Check Out Small Business Health Care Tax Credit; Helpful Resources, Tax Tips Available on IRS.gov
- Health Care Tax Tips
- Small Business Health Care Tax Credit for Small Employers
- What do I need to know about the Health Care Law for my 2013 Tax Return?
- Credit Estimator