Is your business eligible for a small business health-care tax credit? Read on and find out.
This article is part of an eight-part series on how to cope with the implementation of Obamacare.
If you have 25 or fewer full-time equivalent employees, pay average annual wages below $50,000, and pay at least half of the premium cost for employee-only health insurance, the government wants to help you. Really. The Small Business Health Care Tax Credit has been available since 2010, but in 2014, the maximum credit is increasing, from 35 percent of employer-paid premiums to 50 percent. Qualifying businesses will be able to claim the expanded credit for up to two consecutive years.
The amount of the tax credit varies on the basis of the size and wages of your work force. The credit can be used only to offset taxable income, so if you have no net corporate income in the current year, you can carry the credit forward or apply it up to one year back.
If your plan starts in January 2014 or later, you will have to buy coverage through your state’s SHOP exchange to qualify for the credit. Under a transitional rule, though, plans purchased outside the exchange that have a 2013 start date but roll over into 2014 will also be eligible for the credit in the 2014 tax year, as long as you buy through the exchange on your next renewal.