September 30, 2013

Small Business Health Care Tax Credit Changes


Question:

Our church has filed for the Small Business Health Care Tax Credit since 2010. Are there any changes in this credit for 2014?

Answer:

Yes, the IRS has released proposed regulations that will change the requirements for any small business or eligible tax-exempt organization desiring to claim the credit.  The proposed regulations include the following:
  • The employer must obtain and pay premiums through a Small Business Health Options Program (SHOP) Marketplace, which is an exchange to be established under the Affordable Care Act for small businesses.
  • The maximum credit increases for small businesses to 50% (from 35%) and for eligible tax-exempt organizations to 35% (from 25%).
  • There is a two-consecutive year filing limit beginning with tax year 2014. Meaning, if the employer files for 2014 and 2015, the employer may not file for 2016. Claiming the credit for prior periods (2010 through 2013) is not included in the two-consecutive year filing limit.
  • Transitional rules are available for employers having a non-calendar-year health insurance plan.
Eligible tax-exempt organizations will continue to claim the credit on Form 8941 and attached to Form 990-T. Read the Proposed Regulations for more information.

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