IRS Health Care Tax Tip 2016-20, February 17, 2016 The Affordable Care Act includes the small business health care tax credit, which can benefit small employers who provide health coverage for their employees. The small business health care tax credit benefits employers who: have fewer than 25 full-time equivalent employees pay an average wage of less than $51,600 a year pay at least half of employee health insurance premiums Here are some facts that will help you understand this tax credit and how it may affect your small business or tax-exempt organization: Credit percentage is 50 percent of employer-paid premiums; for tax-exempt employers, the percentage is 35 percent. Small employers may claim the credit for only two consecutive taxable years beginning in tax year 2014 and beyond. For 2015, the credit is phased out beginning when average wages equal $25,800 and is fully phased out when average wages exceed $51,600. The average wage phase out is adjusted annually for inflation. Generally, small employers are required to purchase a Qualified Health Plan from a Small Business Health Options Program Marketplace to be eligible to claim the credit. Transition relief from this requirement is available to certain small employers. Small employers may still be eligible to claim the tax credit for tax years prior to 2014. Employers who were eligible to claim this credit for prior years – but did not do so – may consider if they are still eligible to amend prior year returns in order to claim the credit. Gathering the following information will assist you in completing Form 8941, Credit for Small employer Health Insurance Premiums. SHOP QHP documentation or letter of eligibility from SHOP, unless transition relief applies Numbers of full-time and part-time employees and numbers of hours worked Average annual wages for employees Employer premiums paid per employee, if applicable Relevant K-1s and other pass-through credit information Cost of coverage for each employee Payroll tax liability – for tax-exempt organizations only Pass-through credit info – for K-1s of other small employers For more information about the Affordable Care Act visit IRS.gov/aca. Subscribe to IRS Tax Tips Follow @IRSnews on Twitter Health care tax tips Consejos tributarios sobre el cuidado de la salud Consejos tributarios del cuidado de salud – Diciembre 2016 Health Care Tax Tips - November 2016 Health Care Tax Tips - October 2016 Consejos tributarios del cuidado de salud – Septiembre 2016 Consejos tributarios sobre el cuidado de la salud Related CuidadoDeSalud.gov Disposición de la Responsabilidad Compartida para Individuos El Crédito Tributario de Prima – Conceptos Básicos La Ley de Cuidado de Salud a Bajo Precio – Expectativas al presentar su declaración de impuestos Reúna sus documentos de cobertura médica para la temporada de impuestos Centro informativo sobre la ACA para profesionales en los impuestos (en inglés) Cómo corregir una declaración presentada electrónicamente que fue rechazada por falta de un Formulario 8962
