Small Business Health Care Tax Credit
The Small Business Health Care Tax Credit helps businesses afford the cost of health care for their employees. Millions of businesses received postcards from the IRS in April that let them know about the new tax credit. In the case that a business did not receive a postcard form the IRS, it still may be eligible for the tax credit.
Eligibility is determined by three rules:
1.) Providing health care coverage – the employer must cover a minimum of 50 percent of health care for some of its workers. The rate is based on the single rate of health coverage.
2.) Firm size – employers must have less than 25 full time workers or 50 half time workers.
3.) Annual wage – average annual wages must be less than $50,000 per year to qualify
Up to 35 percent of the premium costs for a business are covered by the credit. 25 percent is covered for tax exempt employers, and both taxable and tax exempt organizations may qualify for the credit. There is a gradual reduction of the credit for an organization as the average wages increase along with the number of full time workers.