Small Business Healthcare Tax Credit
Update
The Small Business Healthcare Tax Credit was announced approximately 2 months ago. Recently, we were able to gather more details to share with you.
In order to qualify for the credit it was reported that:
1) Employers must have less than 25 full time equivalent employees.
2) Pay average wages of less then $50,000.
3) The employer must pay at least 50% of the premium.
4) The credit can be up to 35% of the premium this year, but increases to a maximum of 50% in 2014.
On April 1, 2010 the Federal Government came out with a fact sheet with some very good examples as to how this works. However, we have learned of additional items that were not reported in the Fact Sheet, which are highlighted below.
If you know of anyone else, who may find this information timely, please forward this e-mail to them.
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| Health insurance tax credit
Family members not eligible
| Reading the Sunday paper, we ran across this story in the Boston Globe entitled "Health tax credit limiting for some". Please note the following key points:
- Family-owned businesses are not allowed allowed to count family members towards the credit, that is retroactive to January of 2010.
- Family member is defined as a child, a sibling, step-sibling, a parent,a step parent, niece, nephew, aunt, uncle, son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law.
The very tax credit created to help small businesses, which are typically closely held family owned, will not include the family members that run these businesses? This makes no sense!
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| Health insurance tax credit
Drops fast if average wages are greater then 25,000
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Although the tax credit applies to businesses up to 25 employees that average $50,000 per year, the tax credit drops substantially once your employer gets over 10 employees and the average goes over $25,000. Here is a story last week in the Boston Herald entitled, "Health care small biz tax credit elusive ".
The tax credit works best for employers that have 10 or less employees with an average wage of less then $25,000.
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| Health insurance tax credit
Any credit is better then no credit
| | We are still advising our clients to consult with their CPA. It just seems, however, that the initial description of the tax credit left out some very important exclusions & limitations.
Businesses that wil benefit the most will have less than 10 employees and an average wage of less than $25,000, but still be subject to the "family members limitation".
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