Small Business Health Tax Credit

As the info from the Health Care Reform has been rolling out, we have been passing it along to our clients, but I just realized this morning that some agents are running scared and not servicing their clients, so I am going to start posting what I know here as well for others to view.

Small Business Tax Credits

This tax credit is for those businesses who have 25 full-time employees or less and have found it hard to provide or continue to provide medical benefits to those who work for them.

The tax credit equals upto 35% of the employer-paid health premium for small business who meet the following guidelines:

• 25 full-time employees or less
• Employee’s average annual wages must be less than $50,000 (Click here to see how to calculate)
• The maximum credit goes to smaller businesses, particularly those who:
  • 10 or less full-time employees
  • Pay an average annual wage of $25,000 or less

The number of employees does not include:

• an employee of a subchapter S corporation who owns more than a 2% share
• An employee who has an ownership of 5% or more in the business
• Any employees who are related to these owners
• Seasonal workers employed fewer than 120 days per year
• Any “leased” employees (contracted from another firm)

The tax credit is set to begin this year (2010) and will remain in effect at this rate through 2013.  In 2014, the credits will be adjusted.