IRS issues final regs on the health care tax credit — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
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IRS issues final regs on the health care tax credit

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in Office Management,Payroll Management

Under final Affordable Care Act (ACA) regulations, employers that have fewer than 25 full-time equivalent employees (FTEs) who earn up to $50,000 (adjusted for inflation), and that make nonelective contributions equal to at least 50% of employees’ health premiums, are eligible for a 50% health care tax credit (35% for nonprofits).

The credit is available for two consecutive years, but is phased out as employees’ average wages increase from $25,000 to $50,000, and as the number of FTEs increases from 10 to 25. The final regs incorporate all previous guidance, and are effective for tax years beginning after 2013. You may rely on the proposed regs for tax years beginning before 2015. (79 F.R. 36640, 6-30-14)

Figuring employees and hours worked. To determine FTEs, divide the total hours worked during the year for which you pay wages (up to 2,080 per employee) by 2,080 and round down if ­necessary.

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