Small Business Healthcare Tax Credit

If you own a small business your mind probably reels with a variety of information tidbits all necessary to keep you company moving forward. Like a well oiled machine you process requests each day that make adjustments to your future planning and forecasting. This level of functioning is most likely second nature to you which means that any major change in your mental machine can throw a wrench in the workings of your day to day progress and forecasting.

With all of the changes to the tax credits and healthcare details in 2010 I suspect that many a business owner found their mental machines grinding through a few wrenches. A lot of people  that I know have been particularly vexed about the health care credit and how they can determine whether or not it applies to them or is to their benefit. To help clear the air, I did a little research and here is the simple version of what I found.

You may qualify for the credit IF:

• You (the employer) pay for at least 50% of the coverage costs of some of your employees based on a single person coverage rate.

• Your business employs less than the equivalent of 25 full time workers.

• The average annual wage paid by your company to employees is less than $50,000. (The key word here is “average”.)

Click Here for a Quick Qualification Worksheet

Things to Note:

• Both taxable businesses and tax exempt organizations are equally eligible based on the criteria above. The difference is in the percentage of credit given to the business/organization. The maximum credit available for a taxable business is 35% of the premium costs paid by the business in 2010. For tax exempt organizations the maximum credit is 25% of the premium costs paid in 2010.

• If you qualify for the credit and wish to claim it on your 2010 filing, use Form 8941.

For additional information check out these helpful tools:

• Quick Fact Sheet

• Sample Scenarios

• Form 8941

• Video Tutorial