The Affordable Care Act helps small businesses and small tax-exempt organizations afford the cost of providing health insurance to their employees through tax credits. Businesses that employ 25 or fewer employees and pay $50,000 or less in annual wages are eligible for a tax credit that may cover up to 35 percent (up to 25% for non-profits) of the employer’s contribution to health insurance premiums. This tax credit is available for eligible businesses for the 2010-2013 tax years. If you learn that you were eligible for a tax credit in an earlier year, you may file an amended return. The tax credit will increase in 2014 to 50% (35% for non-profits).
Also, since the amount of the health insurance premium payments are more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. More information about the credit, including tax tips, guides, and answers to frequently asked questions, is now available on the IRS Web site, www.IRS.gov. Of course, you should consult with your attorney or tax professional about these credits.
Next week’s post will discuss Step Four: Understand the Tax Credits Available for Individuals and Families.
