Collecting your share of the health reform tax credit

Wondering whether or not your firm qualifies for part (or all) of the small business tax credit that’s part of the healthcare reform bill? Look no further than the IRS.

The feds just released some guidelines on Frequently Asked Questions to help employers get the most out of the tax credit.

Under the Patient Protection and Affordable Care Act, small businesses with fewer than 25 full-time employees and average annual worker wages of less than $50,000 can now receive a tax credit for providing employees with a qualified health plan.

Here’s an example of the type of questions the IRS answers:

Can an employer with 25 or more employees qualify for the credit if some employees are part-time? Yes. To qualify for the credit a company only needs to have the equivalent of 25 or fewer full-time employees (FTEs). Every 2,080 hours worked is the equivalent of one FTE.

To determine your total FTEs, divide the total hours your staff worked throughout the year by 2,080 — and then round that answer up to the next whole number.

Example: a company had 46 part-time employees working a total of 1,040 hours annually (46 X 1,040/2,080). When the total number of hours worked by all part-timers is divided by 2,080, this company will end up paying wages equal to 23 full-time employees. Result: The company is eligible for the tax credit.

To view the complete IRS FAQ, click here.