SHOP Tax Credit Ends in 2016

[Ann H]

Full tax credit of 35% of employer paid premium is for groups with 10 or fewer employees with average annual wages of $25,000 or less. Then it's a sliding scale for groups of 11-25 employees with average annual wages of $50,000 or less. The count of employees and average wages do not include owners or owner's family. Max credit increases to 50% in years 2014-2016 only if you buy from the SHOP exchange. Employer must contribute at least 50% of EE premium. More rules apply.

Here is Federal Form 8941 for claiming the credit - http://www.irs.gov/pub/irs-pdf/f8941.pdf

Here's a guide to calculating the credit. See, I said it's easy peasy! - Small Business Health Care Tax Credit Questions and Answers: Calculating the Credit

 

[RayNY]

Blue,

To qualify, Employers must have <25 Employees, making an average of <$50k/yr (owners and family members may be excluded following certain rules), with at least 50% employer contribution to premium.

Maximum credits are only possible for firms <10 employees making <$25k/yr average.

Currently, the maximum rate is 25% for tax-exempt businesses, 35% for tax paying businesses. It goes up to 35%/50% after 2014 but will only be available for 2 years.

 

[bluediamond]

Well there ya go, most employer's again in my demographics will definitely find this too many hurdles to get their tax credit. But then again if they have a CPA on top of things shouldn't be too hard for them to completed. The last group I wrote two years ago their CPA was in on the presentation and I told him a little about tax credits and it was his, not my responsibility whether it was done or not. I try to stay out of this and refer them to their CPA or tax attorney if they have one.

 

[ABC]

RayNY

You are in a tough situation. NY laws on small groups are difficult to begin with. At least you are dealing with companies that have money that is plus.

Have you considered using the HRA approach with your groups under 10 lives? Would that be legal in NY?

 

[Post Quartermaster]

It has been made pretty clear to me that claiming the small biz tax credit will pretty much guarantee an audit of the business either by the IRS or DOL.

I have been told by a carrier that there is a memorandum of understanding between IRS and DOL regarding this.

I didn't/wouldn't generally believe this, except it happened to one of my groups.

Beware. Its not the carrot you think it is.......

 

[bluediamond]

That's exactly why I stay out of it and tell them to use tax professional.