IRS Releases Final Regulations on ACA Small-Business Tax Credit

Published on: 09:42AM Jun 30, 2014

The IRS released on June 20 their final regulations on the small-business tax credit for paying health insurance premiums for the business employees. This credit has been available since 2010 and was at a 35% maximum level until 2013. In 2014 and 2015 the credit increases to 50% for health insurance premium payments offered through a Small Business Health Options Program (SHOP). If your farm is participating in this program and you pay for your employees premiums, you may be eligible for the credit. Remember, that a credit offsets your income tax dollar-for-dollar.

To get the maximum 50% credit, you must employ less than 11 employees and your average wage is less than $25,000. If your numbers are greater than these in one or each category, then your credit will be reduced. Once you exceed 25 full-time employees the credit is reduced to zero. The IRS has guidance on what you need to know about the credit located here. After 2015, the credit no longer applies.

I have had some businesses qualify for the credit in the past, however, the requirement to participate in the SHOP program may eliminate them from obtaining the credit this year. If you think this may apply to your farm, please make sure to check the IRS website or check with your tax advisor. The credit can materially reduce your tax.