The Small Business Health Care tax credit, which is designed to help small businesses and tax exempt organizations provide healthcare to their employees, is available to employers who pay at least half of the cost of health care for their employees. To qualify you must:
- Have fewer than 25 full time employees (FTE). 2 part time employees = 1 full time employee.
- You must cover at least 50% of the premium for single health care coverage for each of your employees.
- Your employees must have an average wage of less than $50,000 per year. This number is the average! So, if you have 9 full time employees, and 2 part time employees that together make $250,000 you would divide 250,000 by 10, which equals $25,000. Your 10 FTEs (remember 2 part time employees = 1 full time employee) make an average of $25,000 a year. Even if Joe makes $40,000; Sue makes $35,000; Bill makes $30,000; etc.
If you have any questions, or would like additional information regarding this credit please contact your H&S tax professional.