The 2010 Health Care Bill Helps Small Business Lower Your 2010 Taxes!
If, in 2010, you provided and paid for health care for your employees you may have a 35% credit coming on your 2010 Tax return!
This is found money, so make sure you investigate and take advantage if you qualify.
If you provided ≥ 50% of the cost of heath care coverage for some of your workers, based on the cost for a single person, you had < 25 full-time workers (or < 50 half-time workers), and their average annual wages was < $50,000, you likely will qualify.
There is a 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.
To determine if you qualify do the following:
- Add your number of full-time employees (not counting the owners or family), and the number of full-time equivalent part-time employees {determined by adding the total annual hours worked and paid for in 2010 for these part-time employees by 2080}
If the result is <25 then,
2. Take the total annual wages paid (not counting the owners or family), and divide by the above number of employees calculated (i.e. the number <25)
If the result is <$50,000, and
3. You paid at least half of the insurance premiums for you employees, compared to the single (employee-only) coverage rate, then
You may be able to claim the 35% Small Business Health Care Tax Credit n you 2010 federal tax return.
Some examples:
- An auto repair shop with 10 employees:
Employees : 10
Wages: $250,000, or $25,000 per employees Employee Health Care Costs: $70,000 2010 Health Care Tax Credit: $24,500(35%)
2. Restaurant with 40 part-time employees:
Employees: 40 half-time employees (the equivalent of 20 full-time workers) Wages: $500,000 total, or $25,000 per full-time equivalent worker Employee Health Care Costs: $240,000
2010 Health Care Tax Credit: $28,000 (35% credit with phase-out)
How - make sure your tax professional knows the info they need, as noted above. Get it ready for them before you go in for your tax interview!
| Claiming the Credit
Small employers, whether businesses or tax-exempt organizations, will use new Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the small business health care tax credit. Small businesses will include the amount of the credit as part of the general business credit on their income tax returns. Tax-exempt organizations will include the amount of the credit on Line 44f of revised Form 990-T, Exempt Organization Business Income Tax Return. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– to claim the small business health care tax credit. |
