If you own a small business, you probably have heard that you could get a tax credit for providing health insurance to your employees. Although this sounds great, there are other aspects of this tax credit.
Congress established this health care tax credit in 2010 as an incentive for small businesses to offer their employees health insurance, which was part of the overhaul of the health care system. However, many small businesses do not qualify for the tax credit.
The tax credit for offering health insurance to employees is actually fairly limited. In fact, there are many reasons a business may not qualify for this credit, including:
In addition, there is no tax break on premiums paid for relatives’ insurance. For example, many small businesses have siblings, spouses, parents, or sons and daughters on their payrolls. In this situation, to qualify for this tax credit, employees may not be members of the business owner’s extended family.
Unfortunately, many businesses do not qualify for this tax credit after they have gone through the lengthy process of filing a claim. The IRS form required for claiming the credit requires complex calculations, requiring many businesses to hire a CPA or business attorney to complete it on their behalf.
Before deciding to purchase health insurance for employees of your small business, don’t simply base it on the possibility of a tax credit. Find out first if you are eligible to receive the tax break before making this potentially costly decision.
For your small business needs and Texas general counsel services, talk to a trusted business advisor at the Posey Law Firm today by calling us toll-free at 888.269.1962 or locally at 512-646-0828.