Do you own or run a small business or tax-exempt group with fewer than 25 full–time employees? If you do, you should know that the Small Business Health Care Tax Credit can help you provide insurance to your employees. You may be able to save on your taxes if you paid for at least half of their health insurance premiums. Here are several things that you should know about this important credit:

  • Maximum Credit. For tax years beginning in 2014 and after, the maximum credit is 50 percent of premiums paid by small business employers. The limit is 35 percent of premiums paid by tax-exempt small employers, such as charities.
  • Number of Employees. You may qualify if you had fewer than 25 employees who work full–time, or a combination of full–time and part-time. For example, two half-time employees equal one full–time employee for purposes of the credit.
  • Qualified Health Plan. You must have paid premiums for your employees enrolled in a qualified health plan offered through a Small Business Health Options Program, or SHOP, Marketplace. There are limited exceptions to this requirement.
  • Average Annual Wages. To qualify for the credit, the average annual wages of your full–time equivalent employees must have been less than $51,000 in 2014. The IRS will adjust this amount for inflation each year.
  • Half the Premiums. You must have paid a uniform percentage of the cost of premiums for all employees. The amount you paid must be equal to at least 50 percent of the premium cost of the insurance coverage for each employee.
  • Two Year Limit. An eligible employer may claim the credit for any two-consecutive taxable years, beginning in or after 2014. This credit can be claimed for two consecutive years, even if you claimed the credit at any point from 2010 through 2013.
  • Tax Forms to Use. All employers use the Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For-profit businesses claim the credit on Form 3800, General Business Credit. Tax-exempt organizations claim it on Form 990-T, Exempt Organization Business Income Tax Return.

If you are a for-profit business and the credit is more than your tax liability for the year, you can carry the unused credit back or forward to other tax years. If you are a tax-exempt employer, you may be eligible to receive the credit as a refund. This applies so long as it does not exceed your income tax withholding and Medicare tax liability for the year.

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Upcoming Tax Dates

May 2 — Social security, Medicare, and withheld income tax
File Form 941 for the first quarter of 2017. Deposit or pay any undeposited tax under the accuracy of deposit rules. If your tax liability is less than $2,500, you can pay it in full with a timely filed return. If you deposited the tax for the quarter timely, properly, and in full, you have until May 10 to file the return.

May 2 — Federal unemployment tax.
Deposit the tax owed through March if more than $500.

May 2 — Form 720 taxes
File Form 720 for the first quarter of 2017.

May 2 — Wagering tax
File Form 730 and pay the tax on wagers accepted during March.

May 10 — Employees who work for tips
If you received $20 or more in tips during April, report them to your employer Details

May 10 — Social security, Medicare, and withheld income tax
File Form 941 for the first quarter of 2017. This due date applies only if you deposited the tax for the quarter timely, properly, and in full.

May 11 — Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the first 15 days of April.

May 13 — Regular method taxes
Deposit the tax for the last 15 days of April.

May 16 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in April.

May 16 — Nonpayroll withholding
If the monthly deposit rule applies, deposit the tax for payments in April.

May 25 — Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the last 15 days of April.

May 27 — Regular method taxes
Deposit the tax for the first 15 days of May.

May 31 — Wagering tax
File Form 730 and pay the tax on wagers accepted during April.

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