The Affordable Care Act was enacted on March 23, 2010. It contains some tax provisions that take effect this year and more that will be implemented during the next several years.
News For 2010: Tax Credit Helps Small Employers Provide Health Insurance Coverage.
WASHINGTON – Many small businesses that provide health insurance coverage to their employees now qualify for a special tax credit, according to the Internal Revenue Service.
Included in the health care reform legislation, the Patient Protection and Affordable Care Act, approved by Congress and signed by President Obama on March 23. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.
The maximum credit is 35 percent of premiums paid in 2010 by eligible small business employers. In 2014, this maximum credit increases to 50 percent of premiums paid by eligible small business employers.
The credit is specifically targeted to help small businesses that primarily employ low and moderate income workers. It is generally available to employers that have fewer than 25 full-time equivalent (FTE) employees paying wages averaging less than $50,000 per employee per year. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers.
The maximum credit goes to smaller employers – those with 10 or fewer FTEs – paying annual average wages of $25,000 or less.
When we prepare your 2010 tax return we will require additional information from you to calculate if you are eligible for this credit.
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