The IRS has released recently updated guidelines on tax credits for qualifying small group health insurance premiums. Eligible businesses qualifying for these tax credits can claim this help.
- Credits will now apply to vision and dental benefits in addition to medical benefits/premiums.
- A business owner’s salary will not be used in the calculation of “average” earnings for a business when calculating eligibility for a tax credit.
- For a company to qualify for the credits referenced here, it must employ fewer than 25 employees and have an average annual wage companywide of less than $ 50,000.
- Non-profits such as churches or other qualifying religious congregations may now have access to partial credits under this plan.
Also note (from the Kaiser Family Summary), the new legislation intends to:
“…Provide small employers with no more than 25 employees and average annual wages of less than $50,000 that purchase health insurance for employees with a tax credit.
– Phase I: For tax years 2010 through 2013, provide a tax credit of up to 35% of the employer’s contribution toward the employee’s health insurance premium if the employer contributes at least 50% of the total premium cost or 50% of a benchmark premium. The full credit will be available to employers with 10 or fewer employees and average annual wages of less than $25,000. The credit phases-out as firm size and average wage increases. Tax-exempt small businesses meeting these requirements are eligible for tax credits of up to 25% of the employer’s contribution toward the employee’s health insurance premium.
– Phase II: For tax years 2014 and later, for eligible small businesses that purchase coverage through the state Exchange, provide a tax credit of up to 50% of the employer’s contribution toward the employee’s health insurance premium if the employer contributes at least 50% of the total premium cost. The credit will be available for two years. The full credit will be available to employers with 10 or fewer employees and average annual wages of less than $25,000. The credit phases-out as firm size and average wage increases. Tax-exempt small businesses meeting these requirements are eligible for tax credits of up to 35% of the employer’s contribution toward the employee’s health insurance premium.”
For more detailed information, visit: www.irs.gov
This post is provided only as general information. It is not intended to be used for implementation purposes and does not constitute tax or legal advice. This information should not be used as a replacement for competent tax or legal advice. Thanks!