Dear Valued Client,
Happy New Year!
We would like to take a moment to remind you that you may be eligible for the tax credit included in the health care reform law (the Patient Protection and Affordable Care Act). The credit is generally available to small employers who pay at least half the cost of health insurance coverage for their employees. To qualify, an employer must have fewer than 25 full-time equivalent employees for the taxable year and have average annual wages of less than $50,000 per FTE.
The Department of Health and Human Services (HHS) and the IRS want to make sure that businesses who qualify take advantage of the credit, as many small employers have not claimed it. According to a Treasury Inspector General for Tax Administration Audit released November 7, 2011, the volume of claims for the Small Business Health Care Tax Credit has been lower than expected. As of mid-May 2011, only 228,000 taxpayers out of an estimated potential pool of 4.4 million have made claims for the credit. Less than 15% of the expected $2 billion of credit for tax year 2010 was claimed.
Businesses that couldn’t use the credit in 2010 may be eligible to claim it on 2011 returns or in years beyond. Small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.
Please visit the “Small Business Health Care Tax Credit for Small Employers” page of the IRS website (www.irs.gov) for information about eligibility requirements and claiming the credit.
We look forward to working with you in 2012!
Thank you.