SMALL BUSINESS TAX CREDITS

Small business tax credits

As a small business entrepreneur, you need to know that there are specific small business tax credits that can reduce your tax burden. Tax planning is essential to ensure your ability to take advantage of these credits. Discuss with us your particular tax situation.

Small Employer Health Insurance premium Credit: 

The IRS issued proposed regulations governing IRC 45R credit for small employers that offer health insurance coverage for employees.

For years beginning before 2014, an employer is eligible for the small employer health insurance credit only if:

(1) it has 25 or fewer full-time equivalent employees (FTEs);

(2) its average annual wages do not exceed $50,000, adjusted for inflation after calendar year 2013, per FTE; and

(3) it paid premiums for employee health insurance coverage under a qualifying arrangement (Code Sec. 45R(d)(1); Prop. Reg. Sec. 1.45R-2(a)).

An employer does not fail to be an eligible small employer merely because its employees are not performing services in a trade or business of the employer (Prop. Reg. Sec. 1.45R-2(a)).

To claim the credit for tax years beginning in or after 2014, the qualifying arrangement is an arrangement that requires an employer to make a nonelective contribution on behalf of each employee who enrolls in a qualified health plan (QHP) offered to employees through a small business health options program (SHOP) Exchange in an amount equal to a uniform percentage (not less than 50 percent) of the premium cost.

The following steps should be taken to determine whether an employer is eligible for the credit:

(1) determine the employees who are taken into account for purposes of the credit;
(2) determine the number of hours of service performed by those employees;
(3) compute the number of FTEs;
(4) determine the average annual wages paid per FTE; and
(5) determine the premiums paid by the employer that are taken into account for purposes of the credit (Notice 2010-44; Notice 2010-82).

The foregoing is a summary of the rules regarding the small employer health insurance premium credit. Contact our office to discuss the specifics to your small business.

Other business tax credits:

• the investment credit
• the work opportunity credit
• the alcohol fuels credit
• the research credit
• the low-income housing credit
• the enhanced oil recovery credit
• the disabled access credit
• the renewable electricity production credit
• the empowerment zone employment credit
• the Indian employment credit
• the employer social security credit
• the orphan drug credit
• the new markets credit
• the small employer pension plan startup cost credit
• the employer-provided childcare credit
• the railroad track maintenance credit
• the biodiesel fuels credit
• the low sulfur diesel fuel production credit
• the marginal well production credit

Apodaca CPA is an accounting firm based in Monrovia, Los Angeles County, California. We offer tax services, tax consulting and tax preparation services, bookkeeping services, business auditing, business financial services, corporate tax return services, Income tax services, inventory analysis services, non-profit accounting services, payroll processing services, financial services including pension plan management services, projection and forecasts services, cash budgeting and cash management services, education credits, energy credits and vehicle tax credits information and management.
Apodaca CPA provides accounting services, payroll services, personal and business consulting, tax solutions to individual entrepreneurs and small to medium size businesses in the cities of Monrovia, Arcadia, Pasadena, Altadena, Sierra Madre, San Gabriel, Duarte, Industry, South Pasadena, San Marino, Azusa, Covina, West Covina, Irwindale, Glendora, San Dimas, La Verne, Claremont, Burbank, Glendale and Los Angeles.