Health insurance costs may be crushing small businesses, but it looks like many small businesses haven’t been using one of their biggest advantages in the war on rising health insurance costs. According to the non-profit advocacy group the Small Business Majority, 57% of businesses did not know about the new rules which gives small businesses a federal tax credit if they provide health insurance benefits to their employees. Official figures from the Internal Revenue Service (IRS) on the number of small businesses who took advantage of the health insurance tax credit will not be available until the fall, but the Small Business Majority believes that as a result, the number of small businesses who took advantage of the health insurance tax credit is well below expectations.
Healthcare reform provided more than $40 billion in tax cuts to help small businesses provide health insurance beginning in 2010. Under healthcare reform, a small business may claim a federal tax credit worth up to 35 percent of what the business spends on health insurance for its employees. To qualify for the tax credits under healthcare reform, a small business must have fewer than 25 full-time employees, have average annual wages of $50,000 or less, and cover at least 50 percent of the cost of healthcare for its employees. The tax credits are calculated on a sliding scale, with the full 35 percent credit going to small businesses with 10 or fewer full-time employees and average annual salaries of $25,000 or less.
If you are a small business and did claim the health insurance tax credit, we hope that we at MyHealthCafe.com were able to help you through the process.
If you are a small business and did not claim the health insurance tax credit, do not panic! All is not lost! You can still file an amended tax return for up to three years after its original due date by filing a Form 1040X with the IRS.
Also, believe if or not, the Internal Revenue Service (IRS) is actually trying to help small businesses plan out how much they may be eligible for in health insurance tax credits on their website, though. The IRS has provided small business with a nifty worksheet to help calculate their tax credits on their website, and we think it’s worth taking a look at if you’re thinking of filing an amended tax return: IRS Small Business Health Insurance Tax Credit Worksheet.
Did you claim the small business health insurance tax credit for last year? Tell us about it!
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