0
HEALTHCARE TAX CREDIT
                                                                 2010
PLEASE NOTE: The following pag...
Marcus Newman, CBC
      GCG Financial

Bradley Greenberg, CPA
          SLSF
                         Silver Lerner Schwa...
Under the Patient
Protection and
Affordable Care Act
small businesses that
choose to provide health
insurance could be
eli...
―This credit provides a real boost to
                                 eligible small businesses by helping
              ...
Small employers who contribute at
least 50% of the cost of premiums
(or 50% of a benchmark premium).

It is generally avai...
The number of an employer’s FTEs is
determined by dividing (1) the total
hours for which the employer pays
wages to employ...
   For the 2010 tax year, an employer
    pays 5 employees wages for 2,080
    hours each, 3 employees wages for
    1,04...
Seasonal workers are
disregarded in
determining FTEs and
average annual wages
unless the seasonal
worker works for the
emp...
The amount of average annual wages is
determined by first dividing (1) the total
wages paid by the employer to employees
d...
For the 2010 tax year, an
employer pays $224,000
in wages and has 10
FTEs. The employer’s
average annual wages
would be:

...
The maximum credit goes to
              smaller employers.

              Those with 10 or fewer
              FTEs and p...
   Dental Insurance
   Vision Insurance
   Group Long Term
    Care Plans
   Medicare
    Supplemental
    Insurance P...
The premiums taken into account for
the purposes of the tax credit are the
             lesser of:
   %age (min. 50%) of ...
State        Employee   Family   State          Employee   Family   State           Employee   Family
Alaska       6,204  ...
Eligible small businesses can
claim the credit as part of the
general business credit starting
with the 2010 income tax re...
The TAX CREDIT is in the News!
            Catherine Clifford
           CNN Money . Com
                April15, 2010

 …...
Determine   Calculate   Verify




                            Source: IRS.gov
Determine the total number of your employees
(not counting owners, family members or seasonal employees):

  Full-time emp...
Calculate the average annual wages of employees (not counting
owners, family members or seasonal employees):

Take the tot...
You must be paying at least 50% of the
health insurance premium cost for your
single employees in order to be eligible for...
Example:
 Calculating the credit phase-out if the
 number of FTEs exceeds 10 or average
 annual wages exceeds $25,000.

 F...
   The initial amount of                Total credit reduction
    the credit determined                 is equal to $11...
   It will be claimed on the
    EMPLOYER’s annual income
    tax return.
   It CANNOT be used against
    employment ta...
INFORMATIONAL LINKS
www.irs.gov

Tax Credit Article
www.irs.gov/newsroom/article/0,,id=220848,00.html

Tax Credit FAQ’s
ww...
Bradley Greenberg, CPA               Marcus Newman, CBC
SLSF                                 GCG Financial
bgreenberg@slsf...
Brought to you by the
 Accounting Firm of:




  Silver Lerner Schwartz & Fertel
   Certified Public Accountants
         ...
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Small Business Tax Credit Webinar

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Transcript of "Small Business Tax Credit Webinar"

  1. 1. HEALTHCARE TAX CREDIT 2010 PLEASE NOTE: The following pages are designed to provide a general overview of the new health reform law. It does NOT attempt to cover all of the law’s provisions and should NOT be used as legal advice for implementation activities. GCG and SLSF recommend that you consult with your tax or legal advisor regarding how the new requirements will affect your specific plan. In conformity with U.S. Treasury Department Circular 230 tax advice contained in this communication and any attachments is not intended to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code, nor may any such tax advice be used to promote, market or recommend to any person any transaction or matter that is the subject of this communication and any attachments.
  2. 2. Marcus Newman, CBC GCG Financial Bradley Greenberg, CPA SLSF Silver Lerner Schwartz & Fertel Certified Public Accountants www.slsf.com
  3. 3. Under the Patient Protection and Affordable Care Act small businesses that choose to provide health insurance could be eligible for a tax credit based on their cost of health insurance. Source: IRS.gov
  4. 4. ―This credit provides a real boost to eligible small businesses by helping them afford health coverage for their employees,‖ said IRS Commissioner Doug Shulman. ―We urge small businesses and tax-exempt employers to look closely at this important tax break — which is already effective — to see if they qualify.‖ Doug Shulman, IRS Commissioner (pictured above) Source: IRS.gov
  5. 5. Small employers who contribute at least 50% of the cost of premiums (or 50% of a benchmark premium). It is generally available to employers that have fewer than 25 full-time equivalent (FTE). Because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers. Eligible business will be paying wages averaging less than $50,000 per employee per year. Source: IRS.gov
  6. 6. The number of an employer’s FTEs is determined by dividing (1) the total hours for which the employer pays wages to employees during the year (but not more than 2,080 hours for any employee) by (2) 2,080. The result, if not a whole number, is then rounded to the next lowest whole number. DON’T COUNT: seasonal workers, self – employed individuals, 2% shareholders of s- corporations, 5% owners of a small business, or partners of a partnership and family members of owners. Source: IRS.gov
  7. 7.  For the 2010 tax year, an employer pays 5 employees wages for 2,080 hours each, 3 employees wages for 1,040 hours each, and 1 employee wages for 2,300 hours.  The employer’s FTEs would be calculated as follows:(1) Total hours not exceeding 2,080 per employee is the sum of: ◦ a. 10,400 hours for the 5 employees paid for 2,080 hours each (5 x 2,080) ◦ b. 3,120 hours for the 3 employees paid for 1,040 hours each (3 x 1,040) ◦ c. 2,080 hours for the 1 employee paid for 2,300 hours (lesser of 2,300 and 2,080)These add up to 15,600 hours(2) FTEs: 7 (15,600 divided by 2,080 = 7.5, rounded to the next lowest whole number) Source: IRS.gov
  8. 8. Seasonal workers are disregarded in determining FTEs and average annual wages unless the seasonal worker works for the employer on more than 120 days during the tax year. Source: IRS.gov
  9. 9. The amount of average annual wages is determined by first dividing (1) the total wages paid by the employer to employees during the employer’s tax year by (2) the number of the employer’s FTEs for the year. The result is then rounded down to the nearest $1,000 (if not otherwise a multiple of $1,000). For this purpose, wages means wages as defined for FICA purposes (without regard to the wage base limitation). DON’T COUNT: seasonal workers, self – employed individuals, 2% shareholders of s- corporations, 5% owners of a small business, or partners of a partnership and family members of owners. Source: IRS.gov
  10. 10. For the 2010 tax year, an employer pays $224,000 in wages and has 10 FTEs. The employer’s average annual wages would be: $22,000 - ($224,000 divided by 10 = $22,400, rounded down to the nearest $1,000) Source: IRS.gov
  11. 11. The maximum credit goes to smaller employers. Those with 10 or fewer FTEs and paying annual FTE’s 35% AAW average wages of $25,000 or less will receive the full 35% credit. **50% credit in 2014 – 2015 (Additional qualifications apply) Source: IRS.gov
  12. 12.  Dental Insurance  Vision Insurance  Group Long Term Care Plans  Medicare Supplemental Insurance Plans Source: IRS.gov
  13. 13. The premiums taken into account for the purposes of the tax credit are the lesser of:  %age (min. 50%) of the premiums paid, or  %age using the ―benchmark‖ premium for the state your company is in.  SPECIAL TRANSITION RULE FOR 2010 APPLIES Source: IRS.gov
  14. 14. State Employee Family State Employee Family State Employee Family Alaska 6,204 13,723 Maine 5,215 11,887 Utah 4,238 10,935 Alabama 4,441 11,275 Michigan 5,098 12,364 Virginia 4,890 11,338 Arkansas 4,329 9,677 Minnesota 4,704 11,938 Vermont 5,244 11,748 Missouri 4,663 10,681 Washington 4,543 10,725 Arizona 4,495 10,239 Mississippi 4,533 10,501 Wisconsin 5,222 12,819 California 4,628 10,957 Montana 4,772 10,212 West Virginia 4,986 11,611 Colorado 4,972 11,437 North Car 4,920 11,583 Wyoming 5,266 12,163 Connecticut 5,419 13,484 North Dakota 4,469 10,506 D.C. 5,355 12,823 Nebraska 4,715 11,169 Delaware 5,602 12,513 New Hamp 5,519 13,624 Florida 5,161 12,453 New Jersey 5,607 13,521 Georgia 4,612 10,598 New Mexico 4,754 11,404 Hawaii 4,228 10,508 Nevada 4,553 10,297 Iowa 4,652 10,503 New York 5,442 12,867 Ohio 4,667 11,293 Idaho 4,215 9,365 Oklahoma 4,838 11,002 Illinois 5,198 12,309 Oregon 4,681 10,890 Indiana 4,775 11,222 Pennsylvania 5,039 12,471 Kansas 4,603 11,462 Rhode Island 5,887 13,786 Kentucky 4,287 10,434 South Car 4,899 11,780 Louisiana 4,829 11,074 South Dakota 4,497 11,483 Mass 5,700 14,138 Tennessee 4,611 10,369 Maryland 4,837 11,939 Texas 5,140 11,972 Source: IRS.gov
  15. 15. Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011 for health insurance premium payments made after 12-31-09. For tax-exempt employers, the IRS will provide further information on how to claim the credit. Source: IRS.gov
  16. 16. The TAX CREDIT is in the News! Catherine Clifford CNN Money . Com April15, 2010 …In a rough economy, every dollar saved is vital. "It might not match what [health care costs] increase in a year --- but wow, that is sure helpful," Phelps of Oakbrook Esser Studios said of the tax break. "It helps take that total burden off the company."…. Associated Press FOX News . com May 17, 2010 …The White House estimates up to 4 million small businesses may qualify for the tax credit, but it's not clear how many will be eligible.....
  17. 17. Determine Calculate Verify Source: IRS.gov
  18. 18. Determine the total number of your employees (not counting owners, family members or seasonal employees): Full-time employees: (enter the number of employees who work 40 hours each week or more) Full-time equivalent (of part-time) people: (divide the total annual number of part-time hours worked by 2080) If these numbers add up to 25 or less then go on to the next step. Source: IRS.gov
  19. 19. Calculate the average annual wages of employees (not counting owners, family members or seasonal employees): Take the total annual wages paid to employees: Then divide it by the number of FTE determined in STEP 1: This number is your average annual wage (AAW): If the result is less than $50,000 then go to the next step. Source: IRS.gov
  20. 20. You must be paying at least 50% of the health insurance premium cost for your single employees in order to be eligible for the CREDIT. If you believe you are eligible for the TAX CREDIT contact your accountant to determine the amount. Source: IRS.gov
  21. 21. Example: Calculating the credit phase-out if the number of FTEs exceeds 10 or average annual wages exceeds $25,000. For the 2010 taxable year, a taxable eligible small employer has 12 FTEs and average annual wages of $30,000. The employer pays $96,000 in health insurance premiums for its employees (which does not exceed the ―benchmark‖ premium in the employer’s state) and otherwise meets the requirements for the credit.
  22. 22.  The initial amount of  Total credit reduction the credit determined is equal to $11,200 before any reduction ($4,480 + $6,720) is $33,600 ($96,000 x 35%)  The total 2010 tax credit equals  Credit reductions for $22,400 ($33,600 - $11,200) FTEs (12) in excess of 10 is equal to $4,480 ($33,600 x 2/15)  The Credit reduction for average annual wages in excess of $25,000 is equal to $6,720 ($33,600 x $5000/$25000)
  23. 23.  It will be claimed on the EMPLOYER’s annual income tax return.  It CANNOT be used against employment taxes.  NON-REFUNDABLE Credit ◦ But, it can be rolled over to following years’ tax returns (back 1 and forward 20)  The amount of premium that can be deducted is reduced by the amount of the TAX CREDIT
  24. 24. INFORMATIONAL LINKS www.irs.gov Tax Credit Article www.irs.gov/newsroom/article/0,,id=220848,00.html Tax Credit FAQ’s www.irs.gov/newsroom/article0,,id=220839,00.html Revenue Notice 2010-44 (from 5/17/2010) www.irs.gov/pub/irs-drop/n-10-44.pdf PLEASE NOTE: The preceding pages are designed to provide a general overview of the new health reform law. It does NOT attempt to cover all of the law’s provisions and should NOT be used as legal advice for implementation activities. GCG and SLSF recommend that you consult with your tax or legal advisor regarding how the new requirements will affect your specific plan. In conformity with U.S. Treasury Department Circular 230 tax advice contained in this communication and any attachments is not intended to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code, nor may any such tax advice be used to promote, market or recommend to any person any transaction or matter that is the subject of this communication and any attachments.
  25. 25. Bradley Greenberg, CPA Marcus Newman, CBC SLSF GCG Financial bgreenberg@slsf.com Marcus.Newman@gcgfinancial.com Direct: 847.779.6206 Direct: 847.457.3058 Silver Lerner Schwartz & Fertel Certified Public Accountants www.slsf.com
  26. 26. Brought to you by the Accounting Firm of: Silver Lerner Schwartz & Fertel Certified Public Accountants www.slsf.com In conjunction with our HEALTHCARE friends at GCG Financial, Inc. Employee Benefits TAX CREDIT Consultants Thank you for your time!
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