As part of the Patient Protection and Affordable Care Act passed in March 2010, small businesses that pay at least 50 percent of the costs of employee health insurance, have fewer than 25 employees and pay salaries averaging less than $50,000 annually are eligible for a 35-percent tax credit through 2013. But only a fraction of small businesses have taken advantage of it.
Why? A complicated formula about who is eligible and lack of awareness are part of the problem. George Augustin, owner of George I. Augustin Accounting & Tax Services in Sarasota, says the IRS is now “escalating efforts to make knowledge of the tax credit more widespread.”
The available credit increases to 50 percent in 2014 and is available on a sliding scale for businesses that don’t qualify for the full amount, so employers should start planning ahead—which means keeping thorough records. Since eligibility hinges on the number of full-time employees, calculating the full-time equivalent for part-time and commission-based employees may be the biggest challenge and often requires professional help.
“The better the record keeping, the easier it is,” says Augustin. To claim the credit on their 2011 returns and beyond, employers should be prepared to provide their tax professionals with detailed records about the number of employees and the total number of hours each employee works. After that, filling out the new Form 8941 to claim the credit is straightforward.
The number of Hispanics in Sarasota and Manatee, according to the 2010 Census. This number is more than double the 38,682 Hispanics recorded in the 2000 Census.
➜ “To be a great entrepreneur, you need a heavy dose of ignorance. If you knew too much, you would never do what you need to do to start a company.” —Rob Campbell, CEO, Voalté Inc., at the EDC of Sarasota County December Investor Update Breakfast on entrepreneurism