The IRS has just made health care more affordable for small business owners. The recently signed health care reform bill contains a provision that offers tax help for small businesses for providing health care coverage to their employees.
The Small Business Health Care Tax Credit is specifically designed for small businesses and tax-exempt organizations who employ low to moderate-income workers. Small businesses must meet 3 requirements to qualify for this tax, the employer must: (1) cover at least 50% of the cost of health care coverage, (2) employ less than 25 full-time workers and (3) pay average annual wages below $50,000.
The tax credit raises three very important tax questions:
When does the tax credit go into effect?
This new tax credit for small businesses takes effect in the 2010 tax year.
What tax help do small businesses receive from the tax credit?
Qualifying small businesses receive up to a maximum tax credit of 35% of premiums paid. Tax-exempt organizations receive up to 25%.
Who receives the maximum tax credit and how is it determined?
The tax credit is designed to provide the maximum tax help to small businesses that employ 10 or less low-income workers with annual average wages of $25,000 or less. The tax credit gradually phases out for businesses with 10 - 25 employees with average annual wagers between $25,000 and $50,000.
According to government estimates, the Small Business Health Care Tax Credit more than 4 million small businesses and tax-exempt organizations could qualify for this tax help.
Fro more information about the Small Business Health Care Tax Credit or for answers to other tax questions, visit the IRS website.
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