More About the Small Business Health Care Tax Credit

If you pay at least half of the health care premiums for your staff and meet a slew of requirements, you can claim a federal tax credit based on your payments. The IRS recently released a draft of Form 8941, Credit for Small Employer Health Insurance Premiums; this form will accompany 2010 tax returns. The 25-line form walks an employer through the eligibility requirements. Instructions to the form have not been released.

In addition to the form, the IRS has a chart containing 3 “simple” steps for determining eligibility. The steps are helpful, but hardly simple.

The credit was enacted to encourage small businesses to pay for health coverage. To date, I have not heard from any business owner who has decided to offer coverage solely because of the credit opportunity.

Those who already pay for coverage may be glad to reap some tax savings, but the amount of the savings is not sufficient incentive to go out and incur the cost of coverage. Those whose businesses are strictly family owned and run do not qualify for the credit. Self-employed individuals with no employees do not qualify for the credit.

I would be interested to learn whether you have purchased coverage solely because of the credit or know of any other business owner who has done so. You can send me an email at info [at] barbaraweltman [dot] com or comment here.

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