Small Business Health Care tax credit

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The Small Business Health Care tax credit is a United States tax credit available to small employers who pay health insurance premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace. Employers who purchase health insurance through the program may get a tax credit of up to 50% of their premium contributions.

Tax credit terms[]

However, the small-business health care tax credit via Form 8941 is available only to businesses that meet certain standards. Firstly, employers have fewer than 25 employees.[1] Secondly, their employee salary must be less than an average of $50,000.[1] Thirdly, employer must pay at least 50% of the full-time employee's premium costs.[1] However, employers are not required to offer coverage to part-time employees (work fewer than 30 works/week) or dependents, or to seasonal workers who aren't considered full-time employees unless they work more than 120 days during the tax year.[2] Lastly, the coverage to those full-employment must be offered through SHOP Marketplace.[3]

There are employees who are excluded from this arrangement, such as partners or owners of more than 5% of the business and family members.[4]

After 2014, small business owners can only claim the credit for two consecutive years in a row. After this they are no longer eligible to claim this credit.[5]

Employers should apply to receive this tax credit on the annual business tax return.[citation needed] The tax credit is highest in particularly for small companies with fewer than 10 employees, with an average annual salary of $25,000 or less.[3]

For instance, if there are 10 employees with total wage of $250,000, employer will receive a tax credit amount of $35,000 as they contribute at least $70,000 to their premiums.[6]

References[]

  1. ^ a b c "Complying with the Affordable Care Act". Society for Human Resource Management. October 28, 2020. Retrieved September 1, 2021.
  2. ^ "Small Business Health Care Tax Credit Questions and Answers: Determining FTEs and Average Annual Wages". Internal Revenue Service. 2021. Retrieved September 1, 2021.
  3. ^ a b "Small Business Health Care Tax Credit". HealthCare.gov. Retrieved September 1, 2021.
  4. ^ Segal, Eddie (July 20, 2021). "50 Small Business Statistics to Know in 2021". bestsmallbusinessloans.com. Retrieved September 1, 2021.
  5. ^ "How much is your Small Business Health Care Tax Credit worth?". HealthCare.gov. October 10, 2014. Retrieved September 1, 2021.
  6. ^ "Small Business Health Care Tax Credit". HealthCare.gov. Retrieved 2019-01-09.

External links[]

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