SBA reminding businesses of ACA tax credit

WASHINGTON – The U.S. Small Business Association is reminding small businesses about a provision of the Affordable Care Act that gives a tax credit to eligible small employers who provide health care to their employees.
Beginning in tax year 2014, tax credits that could affect small businesses and tax-exempt organizations are:

  • Credit percentage increased from 35 percent to 50 percent of employer-paid premiums and 25 percent to 35 percent for tax-exempt employers.
  • Small employers may claim the credit for only two consecutive taxable years beginning in tax year 2014.
  • The credit, beginning in 2014, is phased out when average wages equal $25,400 and is fully phased out when average wages exceed $50,800. The average wage phase out is adjusted annually for inflation.
  • Small employers are required to purchase qualified health plans from a small business health option program marketplace to be eligible to claim the credit. Transition relief from this requirement is available to certain small employers.
    “Small employers may still be eligible to claim the tax credit for tax years 2010 through 2013,” according to the SBA. “Employers who were eligible to claim this credit for those prior years – bur did not do so – may consider amending prior years’ returns if they’re eligible to do so in order to claim the credit.”
    For more information about the Affordable Care Act, popularly referred to as Obamacare, and filing your 2014 income tax return, visit IRS.gov/aca.

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