Does your business qualify for the healthcare law's new small business tax credit on health insurance? If so, how big is your credit?
Instructions: Fill in variables for rows A, B, C, & D and click "update." B cannot be larger than A.
Here's how to begin asking: The IRS has updated its website to provide information to help small employers understand the new small business healthcare tax credit and determine whether they are eligible for it. The information is at www.irs.gov and includes: (1) a graphic to help employers quickly determine if they qualify for the credit; (2) scenarios that explain how the credit will affect certain businesses; and (3) A set of frequently asked questions and answers. Interested small-business owners are strongly encouraged to contact their accounting professional for specific guidance related to their businesses, employees and particular business situation.
In the meantime, the calculator above will help you estimate your firm’s credit. Just enter four numbers:
(A) How many full-time employees your business has.
(B) How many employees participate in your company plan.
(C) How much you contribute toward each employee’s insurance premium.
(D) The average wage per employee.
The table will generate four variables (E, F, G, and H) related to your company’s insurance costs and premiums. Note: only employers contributing at least 50% of the total premium are eligible for the credit. (Under a recent IRS guidance, businesses that contribute at least 50% on individual policies will be deemed to have met this requirement.)
WARNING: This law is brand-new. We (and everyone else) are just beginning to understand the thousands of complex provisions – including some associated with this credit. The calculations here will change if: (1) if the firm uses part-time employees, (2) if the owner and his or her family purchase their insurance separately, (3) if the firm has a mix of individual and family policies in its pool, and (4) if the Secretary of HHS determines that the company plan is more expensive than some "average" plan to be defined later. Also, the credit is neither refundable nor transferable, meaning it can only be used to offset actual tax liabilities.