Non-Profits are Eligible for Small Business Health Care Tax Credit
Guest Post by Gabrielle Lessard, Esq.
The recently enacted health insurance reform legislation includes a tax credit that helps many small businesses provide coverage for their employees. Many tax-exempt non-profit organizations can also receive the health care tax credit, although at a reduced level.
To qualify, small businesses and exempt organizations must:
- Have fewer than 25 full-time equivalent (FTE) employees
- Pay average annual wages below $50,000, and
- Cover at least 50% of their workers’ health insurance premium costs.
Small businesses can receive a credit up to 35% of their 2010 employee premium costs. This amount increases to 50% in 2014. The non-profit credit starts at 25% in 2010, increasing to 35% in 2014.
The credit is effective January 1, 2010. Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt employers, the IRS will provide further information on how to claim the credit.
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