Is The Health Care Tax Credit Helping Little Businesses?

Your business gets its own credit rating under a separate tax identification number.

The easiest way to get started with a good business credit rating is by getting a business credit card. Health Care Reform Law gives a tax credit to certain small employers:

What is the maximum credit for a qualified employer (other than a tax-exempt employer)?

A.; For tax years beginning in 2010 through 2013, the maximum credit is 35 percent of the employer's premium expenses that count towards the credit, as described in Q/A-3.Example.; For the 2010 tax year, a qualified employer has 9 FTEs with average annual wages of $23,000 per FTE.; The employer pays $72,000 in health care premiums for those employees (which does not exceed the average premium for the small group market in the employer's State) and otherwise meets the requirements for the credit.; The credit for 2010 equals $25,200 (35% x $72,000).6. What is the maximum credit for a tax-exempt qualified employer?A.; For tax years beginning in 2010 through 2013, the maximum credit for a tax-exempt qualified employer is 25 percent of the employer's premium expenses that count towards the credit, as described in Q/A-3.; However, the amount of the credit cannot exceed the total amount of income and Medicare (i.e., Hospital Insurance) tax the employer is required to withhold from employees' wages for the year and the employer share of Medicare tax on employees' wages.Example.; For the 2010 tax year, a qualified tax-exempt employer has 10 FTEs with average annual wages of $21,000 per FTE.; The employer pays $80,000 in health care premiums for those employees (which does not exceed the average premium for the small group market in the employer's State) and otherwise meets the requirements for the credit.; The total amount of the employer's income tax and Medicare tax withholding plus the employer's share of the Medicare tax equals $30,000 in 2010.The credit is calculated as follows:(1) Initial amount of credit determined before any reduction: (25% x $80,000) = $20,000(2) Employer's withholding and Medicare taxes: $30,000(3) Total 2010 tax credit is $20,000 (the lesser of $20,000 and $30,000).7. Can an employer with 25 or more employees qualify for the credit if some of its employees are part-time?A. Yes. Because the limitation on the number of employees is based on FTEs, an employer with 25 or more employees could qualify for the credit if some of its employees work part-time.; For example, an employer with 46 half-time employees (meaning they are paid wages for 1,040 hours) has 23 FTEs and therefore may qualify for the credit.12.