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IRS releases small biz healthcare tax credit guidance
WASHINGTON (12/3/10)--The U.S. Internal Revenue Service (IRS) has released guidance on a small business health care tax credit that “is designed to encourage both small businesses and small tax-exempt organizations to offer health insurance coverage to their employees for the first time or maintain coverage they already have.” The guidance, according to the IRS, “addresses small business questions about which firms qualify for the credit by clarifying that a broad range of employers meet the eligibility requirements, including religious institutions that provide coverage through denominational organizations, small employers that cover their workers through insured multiemployer health and welfare plans, and employers that subsidize their employees’ health care costs through a broad range of contribution arrangements.” The IRS said that the tax credit is available to small businesses that pay a minimum of half of the health care premiums for their individual employees. The credit “is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers,” according to the IRS. The credit may be claimed for the 2010 through 2013 tax years “and for any two years after that,” the IRS said. The maximum credit, which totals 35% of premiums paid by an eligible small business and 25% of the premiums paid by an eligible tax exempt organization, will go to employers with 10 or fewer full time employees. The maximum credit will increase to 50% and 35%, respectively, in 2014. Businesses with 25 or more full time employees or that pay an average of $50,000 per year to their employees will not be eligible for the credit, according to the IRS. Credit unions that qualify for the credit will get the refundable tax credit by filing a newly revised Form 990-T, even if they don't file the 990-T for any other reason. CUNA will provide additional guidance in coming weeks on this new tax credit for tax-exempt organizations, which was included in the 2010 Affordable Care Act. For more on the credit and how to apply for the credit, use the resource link.
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