Carteret Title
DRN Title Search
Register
Log In
Forget your Password?

Home
Directory
Bulletins
Forums
Blogs
Articles
Links
Classifieds
About Us
Contact Us
Advertise
FAQ
Privacy Policy


Source of Title Blog

Affordable Care Act ("Obamacare") Allows Tax Credits to Eligible Small Employers
by Robert Franco | 2013/08/16 |

I wrote this blog for my law firm Web site.  However, seeing as many of us on Source of Title are small employers, I thought it would be good information to share here.  If you are an "eligible small business" you may qualify for a tax credit to help pay for your employees' health insurance.

Source of Title Blog ::

One of the premier goals of the Affordable Care Act ("ACA") is to get everyone covered by some form of health insurance. The main aspect most people hear about is the "mandate" that employers provide health insurance to their employees. While this mandate only applies to those employers with 50 or more employees (and it has been delayed until 2015) the ACA encourages small businesses to provide health care coverage by offering attractive tax credits.  Proper understanding of the ACA, and some planning, can help you maximize your tax credit.

To qualify for the tax credit, you must be an "eligible small employer." This is defined as an employer with fewer than 25 full-time equivalent employees with average annual wages not exceeding $50,000, and the employer must pay at least 50% of the health insurance premiums for a qualified plan purchased through the health care exchange.

While this seems fairly straight forward, the definition of "employee" has several exceptions.  For example, part-owners of the business and their relatives may not count.  In some circumstances, seasonal workers may not count, either. This may actually be favorable for the business in qualifying for the tax credit.  If the business has more than 25 employees, or the average annual wage exceeds the applicable limits, it is possible that not all of the employees will count for purposes of determining the tax credit. The downside, or course, is that the employer cannot claim any credit for the premiums paid for these non-qualifying employees, either.

For 2014, the amount of the credit is up to 50% of the employer contributions to employee health care plans.  The full amount of the credit is available to employers with 10 or fewer employees who have average annual wages of $25,000 or less.  The credit is reduced on a sliding scale if the employer has more than 10 employees, and a separate reduction applies if the average wages of the employees is more than $25,000 and up to $50,000. The credit may also be reduced if the employer premiums paid are more than they would have been if the employees had been enrolled in a small group market in the state where they work.

Tax credits reduce the amount of tax owed, dollar for dollar.  This is preferable to a deduction, which reduces taxable income. To be consistent, the amount of the credit that a business qualifies for reduces the deduction for health insurance premiums paid by the same amount; e.g. you cannot claim a tax credit and a tax deduction for the same premium paid.  Also, this particular tax credit is "non-refundable," which means that if the credit reduces your tax liability below zero you do not get a refund, and part of the credit goes unused.  Any unused credit, however, can be carried backward to past tax years or forward to future tax years. 

It is also important to note that the tax credit has been available since 2010 - although the amount of the credit was previously limited to 35%, rather than 50%.  In those prior years, it was not required that the insurance be purchased through the exchange (because no exchanges existed). 

If you are a "small employer" who pays (or has paid) at least 50% of your employees health insurance premiums, you should consult with a tax professional to see if you qualify for the credit.  Tax years 2010, 2011, and 2012 can be amended if you did not claim the tax credit for which you qualified.  This could result in substantial refunds, or the credit can be applied to future tax years. 

If you were unaware of the small business tax credit for employee health insurance expenses, or if you did not believe you would qualify, you should have your tax adviser take a second look.  It is possible that the some of your employees hours or wages would not count toward qualifying for this valuable tax credit.

Also, if you have not previously offered health insurance to your employees, this may be a good time to reevaluate your benefits plan.  Although the mandate does not apply to employers with fewer than 50 employees, the tax credit could make it affordable for you to offer your employees health insurance.  Health insurance is one of the most valuable benefits an employer can offer to help attract and retain good employees.




Rating: 

Categories: General Interest, Legislation

976 words | 4146 views | 0 comments | log in or register to post a comment

Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

 

Links

Recommended Blogs Recommended Posts Source of Title Services
Recent Comments

 Thank you for the reminder to check for that notation about homestead exemption ending on the ...
by stephen willard
Pat was one of the sweetest men I've ever had the pleasure of knowing.  At every conference he ...
by Douglas Gallant
Pat was a good friend and a critical part of NALTEA.  So many memories from the NALTEA conferen...
by Jay Duncan
Pat was a good friend.  I have many wonderful memories, having known him. for 13 years,  ...
by Wanda Steudel
I have done Richland and Lexington Counties many times and I agree.  My gripe is I have seen ou...
by Naomi Backes
You're a good man, my friend.  I have worked for many lawyers in the past and it is too easy to...
by Alix Ott
I concur with the general sentiment that the advancement in information technology will likely make ...
by Don (Chunshen) Li
Posting from personal experience... The title company I work for has had 2 instances within th...
by Richard Palen
Categories

 
© 2007, Source of Title.