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Your Legal Corner - Client Alert Blog

The Small Business Health Care Tax CREDIT

Written By: Melissa C. Marsh, Esq., California Attorney, March 2012 Add to Favorites
As the March 15 corporate tax filing deadline approaches, we are reminding small businesses to take advantage of the small business health care tax credit. This is a tax credit not a mere deduction. The tax credit is part of the 2010 Affordable Care Act (more commonly known as ObamaCare). The tax credit is worth up to 35% of a small business's premium costs (25% for tax-exempt employers). In 2014, this rate increases to 50% (35% for tax-exempt employers). Again, this is a TAX CREDIT not a mere deduction.

Eligible small employers will need to complete IRS Form 8941 to calculate the credit. The instructions and eligibility factors can be found here.

In general, to qualify for the credit, the employer must: (1) have fewer than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible) and (2) pay its employees an average annual wage under $50,000. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

For more information, see Small Business Health Care Tax Credit for Small Employers at IRS.gov.


Tags: Health Care Tax Credit
Posted In: Business Law Bulletin  Corporate Client Bulletin  Tax Update 


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Disclaimer: The information presented on this web site was prepared by Melissa C. Marsh for general informational purposes only and does not constitute legal advice. The information provided in my articles and alerts should not be relied upon, or used as a substitute for professional legal advice from an attorney you retain to advise or represent you. Your use of this Internet site does not create an attorney- client relationship. Transmission of this article is not intended to create, and receipt of it does not constitute, an attorney-client relationship. All uses of the contents of this site, other than personal uses, are prohibited. You may print or email a copy of any information posted on this web site for your own personal, non-commercial, use, but you may not publish any of the articles or posts on this web site without the Express Written Permission of Melissa C. Marsh.


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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.