Year-End Business Tax Tip: Small Employer Health Insurance Credit

Eligible small employers may be entitled to a tax credit of ranging from 35% to 50% of their contribution toward employee health coverage. This credit is available for two consecutive tax years. An eligible small employer must have:

1. No more than 25 full-time equivalent employees during its tax year.

2. Employees who have average annual wages of no more than $51,800 for 2016.

3. A qualifying arrangement in effect that requires the employer to contribute at least 50% of the health insurance premiums.

Tax-exempt organizations may also qualify for the credit. The credit is refundable for tax-exempt employees but is limited to the amount of the tax-exempt employer’s payroll taxes withheld during the calendar year in which the taxable year begins. The credit for tax-exempt organizations can range from 25% to 35% of employer contributions.

This tax credit must be calculated annually on Form 8941, Credit For Small Employer Health Insurance Premiums, and must be attached to the business tax return.

For more information, please call our office today.

If you have questions about starting, growing, protecting, reducing business taxes, or selling your small business, please contact us. As a CPA, Certified Business Advisor, Small Business Consultant, and Advanced Certified QuickBooks ProAdvisor, we specialize in working with small business owners just like you and provide tax, accounting, financial analysis, management, business planning, and small business advisory services. We can advise you on how to start, manage, grow, and terminate a small business. For more information, call (727) 391-7373 or else visit us on the web at