If you are a small business with fewer than twenty five full time employees on your payroll making an average of $50,000 or less in a year, it will make you eligible for employer health care tax credits under the Affordable care act/ObamaCare. If you are a small business owner, it makes perfect sense for you to take advantage of this opportunity.
Qualification for Tax Credit
For you to be eligible for a tax credit, your business must be applicable to all of the following
- You should have fewer than 25 full time employees on your payroll
- The average salary of your employee amounts to $50,000 or less in a year
- The premium cost of your full time employees is borne at least fifty percent by you.
- Coverage through the SHOP marketplace is offered by you to your employees
The contribution you make towards your employee’s premium cost is subject to a tax credit of about fifty percent and in the case of tax exempt employers it is about thirty five percent.
Information required by you to estimate your tax credit
Before you start estimating your SHOP tax credit, you would need the following information
- You need to determine if you are a tax exempt employer or not
- Make two separate lists of your employees, one for your full time employees and the other for the employees working part time
- The hours worked by each of your part time employees
- You need to gather the wage and tax form
- A record of insurance premiums for health care that you paid the previous year
Determining your Tax credit
Now that you have all the required information to estimate your SHOP tax credit with you, you can move on to determining your SHOP tax credit under the Affordable care act by knowing if you are a tax exempt employer or not as your credit is refundable if you are a tax-exempt employer, although it is limited to the amount of your payroll taxes withheld during the year.
Know the number of your full time employees; your full time employees are people who work for you at least forty hours a week and having only less than twenty full time employees makes you eligible for tax credit. Know the total wages you expect to pay your employees during a tax year as the requirement is that your employees earn $50,000 or less in an year so you should be sure how much they make. Plus figure out how much of your employees premium do you expect to pay as at least fifty percent is the requirement for getting SHOP tax credit under the Affordable care Act/ObamaCare.
So if you are a business owner who has fewer than twenty five full time employees earning less than $50,000 in a year and whose premium is being paid at least fifty percent by you than you become eligible for SHOP tax credit under ObamaCare which could be up to fifty percent of your contribution towards your employees premium costs.