Shop Talk reporter Virginia Bridges spoke with Carol McLaurin, Director of Organizational Development and Advancement at the Small Business and Technology Development Center in Raleigh, about the Small Business Health Care Tax Credit thats available to eligible small businesses. The SBTDC is administered by N.C. State University and is operated in partnership with the U.S. Small Business Administration. Here are McLaurins edited comments.
Q: What is the Small Business Health Care Tax Credit?
In 2010, the federal government created a tax credit to support small businesses that provide their employees with health insurance. The credit was designed to entice more companies to offer the benefit. At its most basic level, for tax years 2010 through 2013, the maximum credit is 35 percent of eligible contributions for small business employers and 25 percent for small tax-exempt employers. Starting in 2014, the credit will increase to a maximum amount of 50 percent and 35 percent, respectively.
Q: What types of businesses are eligible?
Eligible business must meet three basic criteria. They must have fewer than 25 full-time equivalent employees, pay average annual wages below $50,000 per full-time employee, and contribute at least 50 percent of each employees premium.
Thousands of eligible companies in North Carolina are not taking advantage of the lucrative small businesses health care tax credit. If youre a small business owner with fewer than 25 full-time employees that provide health insurance, its very possible youre missing out.
These credits can range from a couple of hundred dollars to well over several thousand dollars. If you employ 10 people at an average wage of $30,000, and pay $200 per month for each employees health insurance premium, this credit could be worth $6,720.
There are always exceptions when dealing with taxes, but in this instance a few minutes of research may lead to thousands of dollars in savings.
For more information and a tax credit calculator, go online to www.nchealthcarecredit.org.