IRS issues forms to help small employers claim the new Health Care Tax Credit

Recently, the Internal Revenue Service released a one-page form along with instructions for small business owners to fill out regarding the new small business health care tax credit for the 2010 tax year.  The aforementioned new forms are Form 8941 (Credit for Small Employer Health Insurance Premiums, and Form 990-T) both of which are now available on the IRS website.  As part of the Affordable Care Act that became law in March, the new health care tax credit makes it possible for small employers and small tax-exempt organizations to contribute to their employee health premiums.  Among the key provisions and aspects of the new forms includes the following:

  • Credit is available to small employers that pay at least half of the premiums for single health insurance coverage for their employees.
  • Credit can be claimed from 2010-2013 & for any two years afterwards.
  • 2010-2013- Maximum credit is 35% of premiums paid by eligible small businesses.
  • 2010-2013- 25% of premiums paid by eligible tax-exempt organizations.
  • Small employers with 10 or fewer full-time equivalent employees (FTE), gets the maximum credit (those paying an average of $25,000 or less in wages).

In perspective, with the American economy still in recession, and unemployment at 9.8%, small business owners are likely to benefit from the new tax credit program.  Financing decisions would not become such a burden, and small businesses would likely start hiring more people again.  Lets hope for a positive outcome for the next several years.

Below is a video that highlights the Small Business Tax Credit.

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