Wednesday, September 14, 2011

Small Business Tax Credit Update

HHS is encouraging small employers and professional service providers to review the new “Small Business Health Care Tax Credit” to see if they are eligible. The tax credit was included in the Affordable Care Act to allow small employers that pay at least half of the premiums for employee health insurance coverage to be eligible for the small business health care tax credit. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ 25 or fewer workers with average income of $50,000 or less.

The IRS’s new outreach campaign will remind employers about the upcoming extension deadlines and will also provide important details to:

• Businesses who have already filed and let them know that they can still claim the credit by filing an amended 2010 tax return

• Businesses without tax liability this year can still benefit but should still evaluate eligibility for the tax credit

• Businesses that couldn’t use the credit in 2010 can claim it in future years if they have already locked into health insurance plan structures and contributions for 2010. These businesses may be eligible to claim the credit on 2011 returns or in years beyond. Small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014

The two tax filing deadlines occur on:

• September 15—Corporations that file on a calendar year basis and request an extension to file to September 15, can calculate the Small Employer Healthcare credit on form 8941 and claim it as part of the general business credit on Form 3800

• October 17—Sole proprietors who file form 1040 and partners and s-corporation shareholders who report their income on Form 1040 have until October 17th to complete their returns

“As the filing deadlines approach, we want to make sure that small business owners don’t leave any money on the table,” said IRS Commissioner Doug Shulman. “Small businesses that offer health insurance should learn about this credit and see if they are eligible.”

The Administration is continuing to encourage private sector outreach. For example, Blue Cross Blue Shield plans have implemented a wide variety of innovative outreach initiatives to promote the program and are encouraging small employers to offer insurance coverage to their workers.

For more information go the IRS web site “Small Business Healthcare Tax Credit for Small Employers” at or go to the HHS web site at