Find Out If Your Small Business Qualifies For The Small Business Health Care Tax Credit

Business tax-filing deadlines are quickly approaching; the Internal Revenue Service has encouraged small employers that provide health insurance coverage to their employees to verify whether they qualify for the small business health care tax credit before it is too late for them to claim it. 

Complete Business Solutions has the information and resources designed to help small employers with issues just like this.  Let us help you determine if you qualify for the credit.

Small employers that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for this credit. The credit is specifically targeted to help small businesses and tax-exempt organizations provide health insurance for their employees.

Depending upon how they are structured, eligible small employers are likely subject to one of the following three tax-filing deadlines.

• March 15: Corporations that file on a calendar year basis.  The health care tax credit can be claimed as part of the general business credit when filing their corporate income tax return.
• April 17: Individuals have until April 17 to complete and file their returns. This includes Sole proprietors, as well as people who have business income reported to them —partners in partnerships, S corporation shareholders and beneficiaries of estates and trusts.
• May 15: Tax-exempt organizations that file on a calendar year basis.

Taxpayers who do not determine eligibility in time can consider obtaining an automatic tax-filing extension, which is usually for six months.

If your business has already filed and has found that they qualified in 2010 or 2011 it isn’t too late you can still claim the credit by filing an amended return for one or both years.

Maybe your businesses or tax-exempt organization had already locked into a health insurance plan structure and contributions but you have not had the opportunity to make adjustments to qualify for the credit for 2010 or 2011. It isn’t too late; you can still make the necessary changes to your health insurance plans so they qualify to claim the credit on 2012 returns. Eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.

IRS related rules, credits, etc. are difficult to stay informed on.  Complete Business Solutions stays informed on the issues that affect our clients.  Contact us today and let us go to work for you!

Payroll Tax Cut Extended to the End of 2012

The IRS on February 23^rd gave official notice that the Social Security tax cut has been extended through the end of 2012.  Read the details below… 

The Internal Revenue Service today released revised Form 941 enabling employers to properly report the newly-extended payroll tax cut benefiting nearly 160 million workers.

Under the Middle Class Tax Relief and Job Creation Act of 2012, enacted yesterday, workers will continue to receive larger paychecks for the rest of this year based on a lower social security tax withholding rate of 4.2 percent, which is two percentage points less than the 6.2 percent rate in effect prior to 2011. This reduced rate, originally in effect for all of 2011, was extended through the end of February by the Temporary Payroll Tax Cut Continuation Act of 2011, enacted Dec. 23.

No action is required by workers to continue receiving the payroll tax cut. As before, the lower rate will have no effect on workers’ future Social Security benefits.  The reduction in revenues to the Social Security Trust Fund will be made up by transfers from the General Fund.

Self-employed individuals will also benefit from a comparable rate reduction in the social security portion of the self-employment tax from 12.4 percent to 10.4 percent. For 2012, the social security tax applies to the first $110,100 of wages and net self-employment income received by an individual.

The new law also repeals the two-percent recapture tax included in the December legislation that effectively capped at $18,350 the amount of wages eligible for the payroll tax cut. As a result, the now repealed recapture tax does not apply.

The IRS will issue additional guidance, as needed, to implement the newly-extended payroll tax cut, and any further updates will be posted on IRS.gov.

Need help with your payroll processing?  Visit our website for information on our services.