Employment Law Blog

News, trends and analysis in employment law and HR

Dec 27, 2010

Small Business Health Care Tax Credit: IRS issues forms and guidance

Health Care Reform 

Wondering if the federal Small Business Health Care Tax Credit can help your company afford health insurance coverage for employees? Check out the IRS’s recently issued guidance: Notice 2010-82, Form 8941 and its instructions. The credit was enacted as part of this year’s federal health care reform law and is generally available to private and tax-exempt employers who employ fewer than 25 full-time equivalent employees (FTEs), who pay average annual wages of less than $50,000 per FTE, and who maintain a health plan under which the employer pays at least 50 percent of the premiums for all employees. For tax years 2010 to 2013, the maximum credit is 35 percent of the premiums paid by private employers and 25 percent of the premiums paid by tax-exempt employers. Eligible employers can claim the credit for 2010 through 2013 and for any two years after that. You can use Form 8941 to calculate the credit and then include the amount of the credit as part of the general business credit on the company’s income tax return. Contact your tax advisor with questions.