Health Care Tax Credit

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Health Care Tax Credit

A tax credit available to some small businesses that provide health insurance for their employees. The health care tax credit is a direct, dollar-for-dollar reduction in a business' tax liability up to a certain percentage of the premium it pays for employee health insurance. The credit phases out for average employee incomes between $25,000 and $50,000 and for business with between 10 and 25 full-time employees. This credit became available in 2010.
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IKS reduces refundable small business healthcare tax credit. The IRS has revealed that small tax-exempt employers claiming the refundable portion of the small business healthcare tax credit under IRC section 45R will see a 6.8% reduction in the amount of their refund payments.
You'll also have exclusive access to an expanded Small Business Healthcare Tax Credit. This tax credit covers as much as 50 percent of the employer contribution toward premium costs for eligible employers with low-to moderate-wage workers.
Businesses with fewer than 25 employees also will be eligible for an expanded Small Business Healthcare Tax Credit, which covers as much as 50 percent of the employer's contribution toward premium costs.
For employers, the TAS provides a similar brief explanation of the small-business healthcare tax credit, with an easy-to-read fact sheet detailing eligibility and credit rates (http://www.
Three ACA estimators are available from the TAS: an individual shared responsibility provision payment estimator, a premium tax credit change estimator, and a small-business healthcare tax credit estimator.
The small business tax credit webpage includes a brief introduction to the healthcare tax credit that assists employers with fewer than 25 employees in offsetting some of the cost of providing coverage.
In order for an organization to receive the maximum healthcare tax credit, the number of its "equivalent full-time employees" (EFTE) may not exceed 10, nor may its "average annual gross wages per equivalent full-time employee" exceed $25,000.
In addition to the number of equivalent full-time employees and average annual wages, the third variable in the calculation of the healthcare tax credit is the amount of insurance premiums paid by the employer on behalf of its employees.
The ACA healthcare tax credit for small businesses and tax-exempt organizations offers a significant opportunity for employers to offer health insurance benefits to their employees at a significantly lower cost, by availing themselves of a generous subsidy on the part of the federal government in the form of a tax credit.
One very important provision of the ACA was a healthcare tax credit specifically designed to encourage small employers to offer and maintain health insurance coverage for their employees.
To simplify the determination of the amount and eligibility for the IRC section 45R healthcare tax credit, the IRS issued Notice 2010-44, which provided guidelines and examples helpful to small employers.
There would be a new optional individual refundable healthcare tax credit of $2,500 for individuals and $5,000 for families.

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