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CUNA New health care extends tax incentives to small CUs
WASHINGTON (4/26/10)--Thanks to recent changes to national healthcare policy, many small credit unions should be eligible for the “Employee Health Insurance Expenses of Small Employers” tax credit for small, tax-exempt employers provided by the recently passed legislation. In a letter to credit union leagues and other representatives, Credit Union National Association (CUNA) President/CEO Dan Mica said that even though the U.S. Congress’s original bill would not have made tax-exempt employers eligible for any form of healthcare tax credit, the Congress did extend “a portion of the small employer tax incentive to not-for-profit employers, including qualifying credit unions and credit union leagues.” CUNA had advocated changing the legislation, as this provision, as originally written, “would have put credit unions and credit union leagues at a specific disadvantage compared to other similar sized employers.” The Internal Revenue Service last week reminded small business owners of this tax policy change through a series of mailings. To qualify for the tax credit, employers must cover a minimum of 50% of employee healthcare costs, based on the single rate. Those employers “must have less than the equivalent of 25 full-time workers,” and must “pay average annual wages below $50,000,” the IRS added. However, “businesses that use part-time help may qualify even if they employ more than 25 individuals,” the IRS said. Both for-profit and tax-exempt entities that qualify for the credit may claim up to 35% and 25%, respectively, of their 2010 premium costs under most circumstances, and that rate will increase to 50% of premium costs for for-profit entities and 35% of premium costs for non-profit entities in 2014. “The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers,” the IRS added. For more on the tax credit, use the resource link.
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