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Small Business Health Care Tax Credit Scenarios

Small Business Health Care Tax Credit Scenarios

The Small Business Health Care Tax Credit is calculated on a sliding scale. The is up to 35% of the employer’s eligible premium expenses for tax years 2010 to 2013. Employers with 10 or fewer employees, paying annual wages of $25,000 or less, qualify for the maximum credit.

Healthcare benefits plus a tax credit

If you have never considered adding health care benefits to your employees this tax credit will help you provide this benefit at a reduced cost. Employees consider healthcare benefits to be an important factor in job selection. Even if you managed to attract your current employees without having health insurance chances are they may consider moving to another employer because you do not offer healthcare benefits. Retaining top talent for your business is key to being successful. Exploring your healthcare tax credit options may help your business stay ahead of the competition.

 2014 healthcare tax credit

Going forward in tax year 2014 the maximum tax credit increases to 50% of premium expenses and coverage must be purchased from a state health insurance exchange. This tax credit is available for a total of any two years.

The following are examples of employers who received the health care tax credit:

  • Auto repair shop with 10 employees gets $24,500 credit for 2010: employees – 10, wages – $250,000 or $25,000 per worker, employee health care costs: $70,000. Tax credit in 2010 $24,500 (35%). Tax credit in 2014 $35,000 (50%)
  • Restaurant with 40 part time employees gets $28,000 credit for 2010: employees – 40 half time employees (the equivalent of 20 full time workers), wages – $500,000 or $25,000 per full time equivalent worker, employee health care costs: $240,000. Tax credit in 2010 $28,000 (35% credit with phase-out). Tax credit in 2014 $40,000 (50% credit with phase-out).
  • Foster care non-profit with 9 employees gets $18,000 credit for 2010: employees – 9, wages – $1980,000 or $22,000 per worker, employee health care costs: $72,000. Tax credit in 2010 $18,000 (25%). Tax credit in 2014 $25,200 (35%)

 If you were unaware of the tax credit and already filed your tax return don’t worry. You can amend your tax return to tax advantage of the tax credit.

Tax attorney - Miami and West Palm Beach Florida. I graduated from the #2 tax school in the US. My over twelve years of entrepreneurial experience will help you make the right decisions for your business. Do you have an IRS tax problem? Let's talk today. Your tax options may change tomorrow.

My blog posts are NOT LEGAL ADVICE. They are for informational purposes only. Actual legal advice can only be provided after you have signed an engagement letter. This information does not create an attorney client relationship. Without attorney client privilege you could divulge information that can hurt your legal rights in the future. I can answer your tax questions in person in Miami and West Palm Beach Florida.
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