Health Insurance Tax Credit for HDHPs
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And just what is that HDHP??? Well, starting in 2009, Georgia has a new tax credit for companies that provide a qualified high deductible health plan (HDHP) to their employees. As of today, the regulations have not been released, but the following details are based on our recent discussions with DOR:
- $250 for each employee enrolled for twelve consecutive months
- The company employs 50 or fewer persons (W-2 and/or 1099)
- The tax credit does not have a sunset or expiration date
- There is no state-wide cap for the tax credit and no pre-approval process for utilizing the tax credit
- This tax credit can be used against 100% of the taxpayer's Georgia income tax liability and can be carried forward indefinitely
- "Employee" is not defined; however, the employee has to be working in Georgia. In addition, there is no average hour per week requirement for the employee.
Many of your clients are currently shopping for employee health insurance or going through the annual open enrollment. This will be a great item to discuss during your year-end tax planning meeting with them. Also remember to bring it up while networking with your insurance broker contacts. You might even want to look at it for your own firm!
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Withholding Tax Credit
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Many companies who can't utilize the job tax credit due to minimal state income tax liabilities are overlooking a great opportunity. Since all companies must pay their state payroll taxes, the withholding option might help them unlock their otherwise unused job tax credits. But here's a warning: the state doesn't make it easy to obtain or administer the withholding option!
The withholding option applies in the following situations:
- Qualified industry in all Tier 1 counties, less developed census tracts, Opportunity Zones, and Military Zones
- Any business in "Lower 40" Tier 1 counties
- Note: does not apply to leased or PEO-supplied employees
Several cautions and "gotchas":
- Filing the intent form (IT-WH) must be timely - 30 days prior to tax return filing, no exceptions!
- Company's ability to utilize the option must be pre-approved by DOR
- DOR will not approve until all of the applicant's withholding account discrepancies are resolved. This can be complicated and time-consuming.
- Payroll personnel or the external payroll service must be taught how to complete the required paperwork accurately.
Although the process sounds daunting, don't give up on the idea -- it can be done. You can show your clients the way by exercising your own gifts of patience, determination, and grace!
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Upcoming Alpharesults Events...
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We frequently speak about Georgia business tax credits to individual CPA firms as well as Georgia Society of CPAs chapter meetings. We hope to see you at one of the following upcoming presentations:
November 21, 2008 - We are not speaking, but this is a good one day session presented by
DOR and sponsored by The Institute for Professionals in Taxation. Click here to register.
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About Us
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Alpharesults has assembled a team with the specialized knowledge and approach required to obtain Georgia income tax credits. We are not a public accounting firm. Rather, our services complement those of public accounting firms and do not create conflicted loyalties, because our professionals do not perform attestation work or other external audit functions.
We focus on small to medium-sized businesses and work exclusively in Georgia with a wide variety of in-state and out-of-state accounting firms. For more information on our services, follow this link.
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