June 23, 2021

3 Steps to Receiving Your Small Business Tax Credit for Group Health Insurance

The Affordable Care Act was passed in 2010 and opened up a door for small business owners to afford health insurance for their employees. When certain qualifications are met, the small business owner can qualify to receive back a certain percentage of what they paid in premiums. While the upfront cost might be overwhelming, the tax credit has provided relief and made the investment in employee health care worth it to many small business owners.

3 Steps to Receiving Your Small Business Tax Credit for Group Health Insurance:

Small business tax credit

Call Texas Insurance Agency to learn more about our group health insurance rates and policies

1.) Review Your Qualifications

The qualifications for receiving a tax credit are easy to comprehend and are as follows:

  • Fewer than 25 full-time or equivalent employees
  • Average yearly wages are less than $50,000
  • The business owner pays a minimum of 50% of insurance premiums under arrangement with the provider.

2.) Calculate Your Tax Credit

If you have a tax service preparing your taxes, they are the best avenue to calculating your tax credit. However, to give you an idea of how much you could receive here is a general idea of how the amount is calculated.

The tax credit can be up to 35% of the total eligible premiums that you pay on employee insurance for a whole tax year. If an employer has ten or fewer full-time employees, with an annual wage of $25,000 or less, they will qualify to receive the maximum tax credit.

Example: A business has 9 employees and each makes $22,000/yr. The employer pays out $50,000 in premiums throughout the year. Because the business has under ten employees they qualify for the full tax credit amount (35% x $50,000) of $17,500 in their specific case.

3.) Claim Your Credit

You can apply for the small business tax credit through your annual tax return paperwork. Specifically, you will need to fill out Form 8941. Ask a tax preparer for more information about whether this is the right step for your situation.

small business tax credit

Purchasing group health insurance could result in a tax credit. Discuss the possibilities with a tax preparer today!

Call Texas Insurance Agency to Get Your Group Health Insurance Policy!

Texas Insurance Agency has affordable options for group health insurance. Additionally, we care about our small business owners and have a commitment to helping every client find the right insurance solution for their needs. Whether you have ten employees or ninety-nine, we are here to help. Contact our office today!

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