Posts Tagged - ‘tax credit’

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Family Businesses Ineligible For Health Insurance Tax Credits

Tuesday, June 1st, 2010

Image: las under CC 3.0

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
  • In-laws
  • 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.

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Which Businesses Are Eligible for Health Insurance Tax Credit?

Friday, May 21st, 2010

Image: eneas under CC 3.0

One of the near-immediate benefits of healthcare reform is the creation of tax credits for small businesses, meant to encourage them to offer health insurance coverage to their employees.

The government has released guidelines detailing which companies are eligible for at least a partial subsidy. They are those that have:

  • Under 25 employees, and
  • an average salary less than $50,000 per year

However, in order to take advantage of the full 35% tax credit offsetting health insurance plan premiums, firms must have:

  • Fewer than 10 employees, and
  • an average annual salary under $25,000

Some small businesses believe that it’s a perverse incentive, given the fact that some companies would have to fire workers or cut their pay in order to become eligible.

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