How to Qualify for the Health Care Credit
You must have fewer than 25 full-time employees, and
your average employee salary is about, on average, $50,000 or less, and
you pay at least 50% of your full-time employees’ premium costs, and
you offer coverage to your full-time employees through the SHOP (Small Business Health Options Programs) marker place
35-50% Tax Credit Available
The maximum tax credit is worth up to 50% of your contribution toward your employees’ premium costs and up to 35% for tax-exempt employers.
The tax credit is higher for companies with fewer with 10 employees who are paid an average of $25K or less. Basically, the smaller the business, the higher the credit.
You Can Claim the Credit Beginning in 2014
This credit is available to eligible employers for 2 consecutive tax years beginning in 2014. For example, if you, the employer, pay $50,000 per year towards employees’ health care premiums and you qualify for the 15% credit, you save $7,500.
How the Health Care Credit Works
How the credit works on your taxes…….in order to receive the credit, you must have a tax liability reported on your tax form. It is important to note, though, unlike for a tax-exempt employer, this is not a refundable credit…meaning if you have a left over credit after it zeroed out your tax liability, you do not get a check for the rest.
That being said, you can either carry the amount forward to the next year or back to the previous year. You can also in a sense “double-dip” on this credit. Let’s say you paid $15,000 toward your employee’s health care premiums and received a $3,000 tax credit. This leaves $12,000 you can still deduct on your tax return as an expense for health care coverage.
File an Amended Return and Get That Credit
In closing, if you forgot to claim this credit on your previous year’s tax return, there is still time to file an amended return.
Contact your tax professional for the amendment since the forms you will need to attach to the return are a bit overwhelming!
Serving Houston & Beaumont professional tax audit defense. IRS Enrolled Agent on staff.
Trained experts in the tax audit field. The Ellem Group 409-347-7997