If you own a small business or manage a small nonprofit, you should be excited about the small business health care tax credit available for 2010 tax returns. This credit is available to small business employers that provide health care coverage to employees. By small, they mean employers with less than 25 full-time equivalent workers (FTEs) who are paid average annual wages of less than $50,000. There is a phaseout for the credit, with the maximum credit going to employers with 10 or fewer FTEs, paying annual wages of $25,000 or less.
The credit is worth up to 35% of the health insurance premiums paid (25% for nonprofits, including churches) by eligible small business employers. It is claimed on Form 8941 and attached to the employer’s annual tax return (1120, 1120S, 1065 or 990T for nonprofits). You can get more detailed information on the IRS website.
President Obama said to the Chamber of Commerce on February 7, 2011, that “the non-partisan congressional watchdogs at the CBO estimate that health care tax credits will be worth nearly $40 billion for small businesses over the next decade—$40 billion, directly to small businesses who are doing the right thing by their employees.” The credit requires gathering some detailed information and doing some calculations, but your business should definitely get a piece of the pie!