Small Business Health Care Tax Credit

The IRS has published questions and answers to help taxpayers to understand if they are eligible to claim the Small Employer Health Care Tax Credit.

Small employers that provide health care coverage to their employees and that meet certain requirements (“qualified employers”) generally are eligible for a federal income tax credit for health insurance premiums they pay for certain employees. In order to be a qualified employer, (1) the employer must have fewer than 25 full-time equivalent employees (“FTEs”) for the tax year, (2) the average annual wages of its employees for the year must be less than $50,000 per FTE, and (3) the employer must pay the premiums under a “qualifying arrangement”.

IRS Q&A's are at http://www.irs.gov/newsroom/article/0,,id=220839,00.html.  The IRS has also posted a video that provides a high level summary of the new credit at http://www.youtube.com/watch?v=85i1kzIG57k.