With last month's U.S. Supreme Court ruling to uphold President Obama's health-care reform law, small businesses should be aware that if they pay at least half of the insurance premiums for their employees at the single (employee-only) coverage rate, these businesses might be eligible for a tax credit.
Here's how it works. For tax years 2010 through 2013, the maximum credit is 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities. An enhanced version of the credit will be effective beginning Jan. 1, 2014. Additional information about the enhanced version will be added to IRS.gov as it becomes available. In general, on Jan. 1, 2014, the rate will increase to 50 percent and 35 percent, respectively.
Here's what this means for you. If you pay $50,000 a year toward workers' health care premiumsand if you qualify for a 15 percent credit, you save "_ $7,500. If you save $7,500 a year from tax year 2010 through 2013, that's total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20 percent, your savings go from $7,500 a year to $12,000 a year.
If you are a small employer (business or tax-exempt) that provides health insurance coverage to your employees, determine if you may qualify for the Small Business Health Care Tax Credit by following these three simple steps: