Health Care Tax Credit

Overview

Eligible small businesses may claim the Health Care Tax Credit for health insurance premiums paid beginning in 2009. Eligibility is established by meeting the following requirements:

• Employer must have fewer than 25 full-time equivalent employees (FTEs)
• Pay at least 50% of the cost of single health care coverage for each employee
• Average annual wage of employees must be less than $50,000 a year

The maximum credit is a percentage of premiums the employer paid during the tax year. For tax years 2010 through 2013, the maximum credit is 35% and 25% for tax-exempt employers. An enhanced version of the credit will be effective beginning January 1, 2014. The rate will increase to 50% and 35%, respectively. Eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. As a result, employers are able to claim both a credit and a deduction for employee premium payments. The credit may also offset an employer’s AMT liability, subject to certain limitations. The credit is refundable for tax-exempt employers so long as it does not exceed the taxpayer’s income tax withholding and Medicare tax liability.

FCG

We determine eligibility for the Health Care Tax Credit integrate the HIRE screening seamlessly with our EZ and WOTC services to eliminate the administrative burden of claiming each of these incentives. Our process includes the following:

• Issue information request
• Identify eligible FTEs
• Quantify qualified costs
• Confirm compliance with the qualifying arrangement rules
• Calculate credit
• Deliver final report
• Assist with filing returns
• Provide audit support (as needed)