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New Rx for small biz health credit

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in Small Business Tax,Small Business Tax Deduction Strategies

The most onerous rules for em­­ployers and employees included in the massive 2010 health care law—the Patient Protection and Affordable Care Act (PPACA)—have yet to take effect. But qualified small business owners may already benefit from a generous tax credit for providing health insurance coverage to workers.

Alert: The Treasury Department has just issued new proposed regulations on the credit. (REG-113792-13, 8/23/13)

Here’s the whole story: Under the PPACA, a small business is eligible for credit if it contributes to health insurance coverage for its employees. To qualify, the business must have fewer than 25 full-time employees (FTEs) with average annual wages of less than $50,000 (see box below). The credit is reduced if you exceed either of these two limits.

The credit first became available in 2010. For the first four years, including 2013, the maximum credit is equal to 35% of the nonelective contributions made on ...(register to read more)

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