Small Business Health Care Tax CreditPresentation Date (January 14, 2013)

What is the Small Business Health Care Tax Credit?

Created in 2010 by the federal government to: • Support small businesses that already offer health insurance• Entice more companies to offer health insurance

For tax years 2010 through 2013, the maximum credit is:• 35 percent of eligible contributions for small business employers• 25 percent of eligible contributions for small tax-exempt

employers

In 2014, the credit will increase to a maximum of:• 50 percent for small business employers• 35 percent for small tax-exempt employers

Is My Business Eligible?

• Do I have fewer than 25 full-time equivalent (FTE) employees? • Is the average wage of my employees less than$50,000 per year? • Do I pay at least 50% of my employee’s health insurance

premiums?

If you can answer yes to these three questions, you’re well on your way.

Estimating the Credit’s Value As number of employees and/or average wage rises, the value of the credit is reduced. For example:

•10 FTEs at average wage of $25K equals a credit of 35%

•10 FTEs at average wage of $45Kequals a credit of 7%

•20 FTEs at average wage of $25K equals a credit of 12%

•20 FTEs at average wage of $35K is phased out, so the credit equals 0%

How Do I Claim the Credit?

For small business owners that have a CPA, please consult with your tax

Professional. For small business owners that file your own taxes, you will need

to complete Form 8941. This form, and a complete set of instructions, can be

found by visiting www.irs.gov and searching “Small Business Health Care Tax

Credit.”

To learn more about the credit and to see examples of how it’s being used in

North Carolina, visit www.nchealthcarecredit.org