Hi, I’m Patrick, and I work for the IRS.
Are you an employer with fewer than 25 employees?
Get the credit you deserve, the Small Business Health Care Tax Credit.
Whether you are a for-profit business or a tax-exempt group, if you pay at least half the cost of premiums for single coverage health insurance for your employees, you may be eligible.
The credit has been around since tax year 2010, but some of the rules change for tax years beginning in 2014 or later.
First, the maximum credit increases from 35 percent to 50 percent for small business employers, and from 25 percent to 35 percent for small tax-exempt employers.
Next, to claim the credit, generally employers must offer employees insurance purchased through the small business health options program, known as the SHOP Marketplace.
And finally, in 2014 and subsequent years, the credit is only available to eligible employers for two consecutive taxable years.
Although the maximum credit amount changes, the definition of a small employer has not.
Usually a small employer for the purpose of the credit is an employer with fewer than 25 employees, and those employees must earn low to moderate wages.
There are other special rules.
For example, two half-time employees generally count as one full-time employee.
So if you have more than 25 employees, and some are not full-time, you may still qualify for the credit.
If you're a small business, you'll claim the credit as part of the general business credit on your income tax return, using Form 8941.
If you have no tax due, you can carry the credit back or forward to other years.
And since the credit will be less than the full amount of your premium payments, you may be eligible to claim a business expense deduction for the difference.
That’s both a credit and a deduction for employee health insurance premium payments.
If you're a tax-exempt employer, you'll claim the credit on Form 990-T
And for tax-exempt employers, the credit is refundable.
That means you can get it even if you owe no tax.
For more information, go to IRS.gov/ACA.