Randy J. Elder, CPA, P.C.

Small business, Affordable Care Act and Taxes

For many of us, the dust has settled on signing up and getting on board with the provisions of the Affordable Care Act (ACA). However, if you have a new business, your business is growing, and you are adding employees or other changes have occurred since the beginning of the year, you might want to review your options to make sure you have the best arrangement for your business and are taking advantage of available tax savings.

As a small business owner and tax professional, I pay close attention to both the requirements and the tax implications. Requirements vary depending on the number of employees. Since most of my clients have less than 25 full-time employees, I’ll focus on issues pertaining to that group today.

Implementation of the ACA rules and regulations occurs in stages, and many took effect in 2014. One of the most important provisions that you want to make sure you benefit from, if you qualify, is the Small Business Health Care Tax Credit.

If your business has fewer than 25 full-time equivalent employees, the average annual wages paid to employees is less than $50,000. Therefore, you contribute 50% or more towards your employees’ health insurance (self-only premiums) you may qualify for a business tax credit of up to 35% (2010 through 2013) to help offset your costs. In 2014 the tax credit increased to 50%. To claim the tax credit, you must qualify and be a participant in the Health Insurance Marketplace for small employers also known as Small Business Health Options Program (SHOP). SHOP is intended to lower the costs for small businesses. Currently, small businesses pay 18% more for health insurance versus larger companies. If you haven’t looked into SHOP, you may want to do some comparison shopping both for potential cost savings as well as the possibility of tax savings.

If you qualify, you can claim the credit (up to 35%) for 2010 through 2013 and the enhanced credit (up to 50%) for any two consecutive taxable years beginning in 2014. If you have already filed your tax returns but realize after the fact that you qualified in 2013 or an earlier year, you can still claim the credit by filing an amended return. If you have questions about the Affordable Care Act tax implications or filing amended returns, please give me a call. You don’t want to miss out on any potential tax savings.

If you are looking for general information, you might want to sign-up for one of the weekly webinars hosted by the SBA, the Department of Health Human and Services, and Small Business Majority. Topics covered include cost containment, the Small Business Health Care Tax Credit, the new Health Insurance Marketplace, and Employer Shared Responsibility. These webinars are being held Thursdays in July and August. Spanish versions are held Tuesdays. For more information go to HTTPS://www.sba.gov/healthcare or give me a call.