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If you own a small business and offer your employees health insurance, you may be able to claim a credit on your tax return for it. The credit is based on a percentage of the amount of premiums that your business pays for employees to have health care coverage. And, of course, you must meet certain requirements to take advantage of this credit:


  • You must cover at least 50% of the cost of health care for some of your workers based on the single rate,
  • Your firm must have less than the equivalent of 25 full time employees to qualify as being a small business, and
  • You must pay your employees (individually) less than $50,000 a year.


This credit applies to both for profit and tax exempt employers, but the rates vary between the two types.


The amount of the credit can be up to 35 percent of the business’ health insurance premium costs in 2011 for taxable businesses and is up to 25 percent for tax exempt businesses.


This credit is set at these rates until January of 2014, at which time they will increase to 50% for taxable employers and 35% for tax exempt employers.


The credit amount is calculated on your Form 8941, Small Employer Health Insurance Premiums. If the credit ends up being more than your tax liability, you can chose to apply it to a previous tax return or a future tax return, and in certain circumstances you can even receive it as a refund!


To take advantage of this and many other credits offered to small businesses, it is best to consult a tax professional!