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Soon, tax credits will be provided to small businesses to help them afford group health insurance. However, those firms completely or mostly staffed by family members may not be able to take advantage of the 35% to 50% benefit.
Why? Family members have historically been exempt from business tax credit programs, because of the potential of unfairness and abuse of the system and nonrelated taxpayers.
Which employees won’t count towards the amount of tax credit received? According to the IRS, family members are considered to be:
- A child or grandchild of the owner
- a sibling or step-sibling
- Aunts and uncles
- Parents, grandparents, and step-parents and step-grandparents
- Nieces and nephews
The healthcare reform law will have little benefit for small businesses mostly staffed by relatives. However, those with relatively few family members employed will experience more positives.