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Claim New Health Care Tax Credit With This IRS Form

There’s a lot contained in the Affordable Care Act—including new tax credits, health insurance exchanges, and other tools aimed at helping entrepreneurs provide health insurance coverage to their employees at a reasonable cost.  So much is in the legislation that it can be a bit intimidating to figure out exactly which aspects of the law affect your business.

One immediate effect: If you have less than 25 full-time equivalent employees with average annual wages below $50,000, you can take advantage of a tax credit. To help, Karen Mills, Chief Administrator for the Small Business Administration just announced the release of a one-page form and instructions on how to claim this credit for the 2010 tax year. You can find the information at the IRS website.

In general, the credit is available to small employers that pay at least half of the premiums for health insurance coverage for their employees. The smaller your business, the bigger the credit; companies with 10 or fewer employees benefit most. The guidance explains eligibility for the credit in more detail.

The credits are available for tax years 2010 through 2013 and for any two years after that. Through 2013, the maximum tax credit is 35 percent of premiums paid by small employers and 25 percent for eligible tax-exempt organizations. Beginning in 2014, those levels increase to 50 percent and 35 percent, respectively. In 2014, firms with up to 100 workers will be able to pool their buying power and reduce their administrative costs by purchasing coverage through a health insurance exchange.

The announcement was sent out by Administrator Mills. I’ve noticed the SBA is getting a lot better about tooting its own horn and keeping small business owners up to date about new programs and services. That’s a good thing.