The 010 Patient Protection and Affordability Act creat a tax crit to reimburse qualifying employers for up to 50% of premiums (this increas from 35% in 014) paid for their employees.  The crit is call the “ Employer Health Care Crit” and is calculat using F 8941.  Although the crit can be quite substantial for employers who qualify, calculating the crit can be so confusing, complex, and time-consuming that many employers simply throw their hands up and abandon the crit entirely.  In this article, I’ll lay out a basic framework of the Employer Crit as it applies to businesses (the crit is also available to tax-exempt employers, although the crit amount and rules are slightly different).  My goal is to cut through some of the confusion surrounding the crit to help employers decide whether or not to invest their time pursuing the crit.

Businesses that qualify for Employer Crit must meet three basic criteria:

There are four s a business must answer to determine whether or not it qualifies for the crit. 

There are two other items to consider when deterng whether or not a business qualifies for the tax crit:

One important item to note is the fact that many employers who qualify will not receive the full 50% crit.  The crit is skew so only businesses who employee 10 FTEs or less who earn an average of $5,000 or less annually will receive the maximum crit.  The crit rapidly decreases once the number of FTEs exces 10, or the average wage exces $5,000.  The crit disappears entirely when there are more than 4 FTEs and/or an average annual wage equals or exces $50,000.

This article offers an outline to help business owners determine whether pursuing the Employer Crit is the effort.  As always, the tax infation provid by this or any article should never replace professional tax consultation.  If should have any s regarding r business or personal ts, please feel free to contact our office at (304) 67-594 to speak with a tax professional.

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