THE HEALTHCARE REFORM TAX CREDIT:: Stratford Financial Group

Did you receive a post card from the IRS about the healthcare reform tax-credit?
Millions of small businesses will (if they have not already) receive a post card from the IRS that alerts them to the NEW Small Business Health Care Tax Credit and encourages them to check their eligibility. Even if you don't receive a postcard, your business may still be eligible.

Eligibility Rules:

A qualifying employer must cover at least 50% of the cost of health care coverage for some of its workers based on the single rate.

A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).

A qualifying employer must pay average annual wages below $50,000.00

Both taxable (for-profit) and tax-exempt firms qualify.

Amount of Tax Credit:

The credit is worth up to 35% of a small business’ premium contribution in 2010. On January 1, 2014, this credit increases to 50% (35% for tax-exempt employers).

The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Listed below are three simple steps to determine if your business qualifies for the Small Business Health Care Tax Credit:
1. Determine the total number of employees who work at least 40 hours (not including owners or family members). Include full-time equivalent of part-time employees by dividing the total annual hours of part-time employees by 2080. If the total number of employees is fewer than 25 go to step #2.
2. Calculate the average annual wages of employees (not including owners or family members) by taking the total annual wages paid to employees and dividing it by the number of employees from step #1.
3. If the result is less than $50,000, AND you pay at least half of the insurance premiums for your employees at the single (employee-only) coverage rate, then you may be able to claim the Small Business Health Care Tax Credit.

To help make this calculation easier, you can use this tax credit calculator.

For more information on the tax-credit for small businesses please contact your Stratford Representative at 866-217-9053.