Small business owners need to fully understand how the health care tax credit will affect them this coming year. For small employers who have less than 25 employees, pay an average wage of less than $50,000 and pay at least half of employee health insurance premiums, a tax credit may be waiting. A new version of the health care tax credit will be available in 2014, but for the years 2010 through 2013, the maximum credit is 35% for small businesses and 25% for small tax-exempt employers such as charities.
This can equate to large savings so it’s important not to overlook this credit benefit. Even if you are a small business employer who did not owe any taxes because of other deductions, you can carry the credit back or forward for other years. Another benefit outlined in the credit is that since the amount of the health insurance premium payments are more than the total credit, eligible small businesses are still able to claim a business expense deduction for premiums more than the actual credit. Many small business owners may not be aware of this and through appropriate awareness, more small business owners can get the funds they deserve.
Small tax-exempt employers should be aware that the credit is refundable, so even if there is no taxable income, they can be eligible for the credit as a refund as long as it does not exceed the income tax withholding and Medicare tax liability. Keep in mind that if you can benefit from the health care tax credit this year but forgot to claim it, there is still opportunity to file amended claim. Talk to a tax expert to determine where savings can be found and to see if you qualify for this useful tax credit available for small-business owners.
For more detailed information visit www.IRS.gov.