Did you register for the small business health care credit this year? If not, you should consider the below a cautionary tale.
The Huffington Post recently detailed one such case: a small business owner in Kentucky found that for the past four years, he hadn’t filed for a small business tax credit – one that would’ve allowed him to recoup 35% of what he pays for health insurance. Calculating the relevant figures across the four years that he missed the credit, he found that his business had lost out on $40,000 in savings. It gets worse, too: he would’ve been eligible for a 50% tax credit this year, meaning he could have saved $25,000 of his $50,000 in health care benefit costs during 2013 alone. Instead, he paid that $50,000 in full.
The single biggest budget expense other than payroll is healthcare. By employing the use of the tax credit, small business owners can save big on their health care costs.
How can small business owners apply and qualify for the health care credit?
The Internal Revenue Service’s website has posted a guide that offers small business owners tips on how to claim the tax credit – so that they never run into the same problem as the business owner detailed above.
To be eligible, a business must cover at least 50% of the cost of single health care coverage for all of its employees. It must also employ at least 25 full-time employees, all with average wages of less than $50,000 per year, adjusted for inflation beginning in 2014. Finally, to qualify for the credit, businesses need to obtain health care coverage through the nationally subsidized SHOP Marketplaces for 2014 and beyond. Then, using Form 8941, these businesses can calculate the credit – and file for the savings at the end of the tax year.
By doing so, business owners can obtain a tax credit of up to 35% for 2010 through 2013, and for up to 50% for 2014 and beyond. Those are major savings that can help to offset major health care costs.