In Newswire 2014-62, the IRS reported that "small" employers may be eligible to claim a small business health care tax credit up to 50% of employee premiums for two additional years beginning in 2014.  

A brief educational summary of the small business health care tax credit is below.  The law and its accompanying regulations contain caveats and exceptions, and require calculations that require consultation with an advisor.    

How Does the Small Business Health Care Credit Help Small Employers Provide Health Care Coverage?

"Small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for the small business health care tax credit," stated the IRS in its news release. "The maximum credit rate rises to 50 percent for small businesses and 35 percent for tax-exempt organizations."

A qualifying arrangement requires that the small employer pay the health care premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace (or through a direct enrollment process if available).  

The credit is only available for two additional years beginning with 2014.

If the Small Business Does Not Owe Tax in 2014, How Can It Use the Tax Credit? 

A small business employer who does not owe tax during the year may carry the credit back or forward to other tax years. 

Do The Health Care Premiums Cost More than the Credit Is Worth?  

Yes, but eligible small businesses may claim a business expense deduction for the health care premiums that exceed the tax credit. Thus, an eligible small business may claim both a credit and a deduction for employee premium payments.

What Is An Eligible Small Business?

To be eligible, a business must have fewer than 25 full-time equivalent employees (FTEs).  The employees must have average wages of less than $50,000 (as adjusted for inflation beginning in 2014) per year. 

The small business must cover at least 50% of the cost of single (not family) health care coverage for each employee. 

Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

“Our brand-new Tax Facts title is exciting in many ways,” says Rick Kravitz, Vice President & Managing Director of Summit Professional Network’s Professional Publishing Division. “First of all, it fills a huge gap in the resources available to today’s advisors. Small business is a big market, and this book enables advisors to get up-and-running right away, with proven guidance that will help them serve their clients’ needs. Secondly, it addresses the biggest questions facing all taxpayers and provides absolutely reliable answers that help advisors solve today’s biggest problems with confidence.”

“Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.  The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Rick Kravitz.

Anyone interested can try Tax Facts on Individuals & Small Business, risk-free for 30 days, with a 100% guarantee of complete satisfaction.  For more information, please go to www.nationalunderwriter.com/TaxFactsIndividuals or call 1-800-543-0874.