Tax Credit for Small Business

[tsennette]

I am a newby so need your expertise. HELPPP!

I am reading about the PPACA tax credit for small businesses. Specifically, I'm not clear on this: If an employer contributes premium under a Section 125 arrangement, will that premium count towards the tax credit? Below are statements from two different websites that seem to conflict on that answer.

1) "It appears that employer contributions to individual policies through HRAs and Section 125 POPs are qualified contribution arrangements."

2) "Note that only the employer's share of the premium is counted for purposes of the credit and that any portion of the premium paid through a salary reduction arrangement under a Section 125 cafeteria plan is not treated as being paid by the employer."


Are these statements in conflict or am I just too new to understand? :-) Any clarity you can provide will be most appreciated!

 

[VolAgent]

You're not understanding it. It says that an employer's contribution to certain individual policies does count towards the credit. But that an employer cannot count the employees contribution to a policy towards the credit.

 

[tsennette]

So then... these statements are more about WHO pays the premium regardless of the arrangement... did I get that right?

 

[VolAgent]

These statements further define what is eligible for tax credit. The first includes a group of policies that might not otherwise be eligible for credit, while the second prevents employers from trying to claim credit for the premiums paid by employees.

However, looking at the statements again, it appears they were written by a third party. Generally the law does not include statements such as "It appears" or "Note that". This person's interpretation of the new law may or may not be correct.

 

[tsennette]

I think the fog is beginning to lift :-)... I think (LOL).

They were written by third parties. I've been reading everything I can to learn. The actual IRS document (Section 45R) says "For purposes of this credit, any premium paid pursuant to a salary reduction arrangement under a section 125 cafeteria plan is not treated as paid by the employer."

In your opinion, are the statements from the third parties in line with the statement from the IRS?

 

[VolAgent]

The actual IRS document (Section 45R) says "For purposes of this credit, any premium paid pursuant to a salary reduction arrangement under a section 125 cafeteria plan is not treated as paid by the employer."
[\quote]

All this statement actually says is, The employer cannot treat employee contributions as employer contributions for purposes of calculating the credit. It is the same as #2 from your third party. The person is trying to infer #1 from that statement. Unless there is more to it, I would say #1 is a stretch.

 

[tsennette]

VolAgent... Have you been told today that you are wonderful? If not, let me be the first! You are WONDERFUL! Thank you so much! You have helped me tremendously and I am SO grateful!!! Now I will continue to dig into this tax credit thing with a little more confidence that I can explain to a client. THANK YOU!

 

[insurehound]

VolAgent... Have you been told today that you are wonderful? If not, let me be the first! You are WONDERFUL! Thank you so much! You have helped me tremendously and I am SO grateful!!! Now I will continue to dig into this tax credit thing with a little more confidence that I can explain to a client. THANK YOU!

I think I'm going to be sick

 

[VolAgent]

I think I'm going to be sick

Don't be jealous. We can't all be wonderful like me.

 

[arnguy]

Don't be jealous. We can't all be wonderful like me.

OMG, I hope you don't break your arm patting yourself on the back!