The IRS wants you to know that, if you are a small employer, there is a tax credit that can put money in your pocket. The small business health care tax credit is available through the small business health options program, also known as the SHOP marketplace. Employers must have fewer than 25 full-time equivalent employees, pay an average wage of less than $50,000 a year, and pay at least half of employee health insurance premiums. The IRS offers these five facts about this credit:
- The maximum credit is 50% of premiums paid for small business employers and 35% for small tax-exempt employers.
- To be eligible, you must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program Marketplace or qualify for an exception to this requirement.
- The credit is for eligible employers for two consecutive taxable years beginning in 2014 or later. You may be able to amend prior year tax returns to claim the credit for tax years 2010 through 2013 in addition to claiming this credit for those two consecutive years.
- You can carry the credit back or forward to other tax years if you don’t owe tax during the year.
- You may get a credit and a deduction for employee premium payments. Since the amount of your health insurance premium payments will be more than the total credit, if you are eligible, you can still claim a business expense deduction for the premiums in excess of the credit.