Friday, June 24, 2016

Is Your Small Business Eligible for a Health Care Tax Credit?

Enacted in 2014, there’s a federal law that gives a tax credit to small employers who become eligible by providing health care coverage to their employees. This is something you’ll want to pay attention to for your Affordable Care Act return as well as other IRS filings.

Who Gets the Tax Credit
In order to be eligible for a small business health care tax credit, small employers, including tax-exempt organizations, must:
  • have fewer than 25 full-time employees, whose average annual wages are less than $50,000 and
  • pay a uniform percentage equal to at least 50% of the premiums for employee-only insurance coverage for all employees.
Keep in mind that your part-time employees add together to make full-time employee equivalents when you’re totaling your full-time employees. You’re also required to contribute toward premiums on behalf of each employee enrolled in the qualified health plan (QHP) you offered through a Small Business Health Options Program (SHOP Marketplace).

Calculating the Tax Credit
When calculating your credit, only premiums paid for your employees by you (the employer) for QHPs offered through SHOP are counted, beginning with the tax year 2014. If you have taxable years 2010 through 2013 to report, you may count premiums paid by you for coverage under a qualifying arrangement. For any tax year, these situations are not counted toward your tax credit:
  • Health reimbursement arrangement (HRA) payments,
  • Health flexible spending arrangement (FSA) payments,
  • Health savings account (HSA) payments, and
  • Employee tobacco surcharges paid by the employer under certain SHOP plans.

And a Friendly E-filing Reminder
While figuring up your small business health care tax credit, don’t forget the e-filing deadline for your ACA return is next Thursday, June 30, 2016. Make sure you have your forms transmitted through ExpressIRSForms by June 29 to ensure the IRS receives them on time. If you have any questions, our friendly support staff is here to help! Just give us a call Monday through Friday, 9:00 a.m. to 6:00 p.m. EDT, at (704) 684-4751 or send us an email anytime to

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