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The IRS Lists 22 Frequently Asked Questions (Yes, the Devil is in the Details.)

The IRS has published a list of 22 "frequently asked questions" about the Small Business Health Care Tax Credit, available for tax years beginning after December 31, 2009.

(Who had time to come up with 22 questions?...)

For those brave of heart and strong of stomach, the details are at http://www.irs.gov/newsroom/article/0,,id=220839,00.html

But here's what you really need to know:

Like most government "benefits", there's more strings attached than a room full of pianos.

It's a great deal for qualifying non-profits - they get to take a straight 35% credit against payroll taxes!

For businesses, it's not so good....

For businesses that do qualify, have federal income tax liability, and are already offering health care benefits to their employees, the bill may provide some benefit. Please give me a call to discuss the fine print.

But first, your business has to qualify (less than 25 full-time-equivalent employees, and average annual wages of less than $50,000 - and owners and relatives don't count, so if you have a small family business, "fugedaboutit!")

Next, even if you do qualify, the credit is based on the lesser of the premiums you actually pay or the "average small group market premium" as determined by the HHS Secretary. (Per Rev. Rul. 2010-13, the 2010 annual amounts for Virginia are $4,890 for employee-only and $11,338 for family coverage.)

Finally, if you get through all the hurdles above, guess what? Your for-profit  business credit is part of the IRC Section 38 Business Credit, which is a limited, non-refundable credit against tax, which is claimed only after all other non-refundable credits are used. So if your small business is just barely breaking even, or you've got carry-forward losses that offset your current income, your current Small Business Health Care Tax Credit is zero, nada, zip! (But you still have to reduce your deductible health insurance expense by the amount of the credit that you can't use...)

Simple, huh?  What's not to like?