Paychex Insurance Agency, a subsidiary of Paychex Inc., is making it possible for small-business owners who provide health insurance to employees to determine if they qualify for the small-business tax credit under the provisions of the Affordable Care Act, as well as apply for the credit on their annual tax return.
To help determine eligibility and provide a look at potential savings, Paychex Insurance Agency offers a free, Web-based Small-Business Tax Credit Estimator, available via the company's Website. Created using Internal Revenue Service guidelines, the estimator calculates the estimated credit based on employees' hours, wages, premiums and employer contributions. The tool is designed to be a resource for small employers who currently offer, or are thinking about adding, health insurance benefits, as well as for employers offering standalone dental and vision plans.
Recent hearings by the House Ways and Means Committee indicate low support of the small-business tax credit among small employers due to the daunting process of first determining eligibility and then applying for the credit. By not filing for the tax credit, small businesses are potentially missing the opportunity to receive a health premium credit now, and when the credit increases in 2014. Paychex Insurance Agency is offering two tools to small-business owners to help ease this process.
In addition to the Tax Credit Estimator, Paychex Insurance Agency offers a new Small-Business Tax Credit Package to provide business owners with a resource that includes the information they need to assess their eligibility and file for the health care reform small-business tax credits. To receive the package for the 2012 calendar tax year, business owners have to be a Paychex payroll and Paychex Insurance Agency client for the entire 2012 calendar year. The package includes a "Health Care Premium and Wage Report," which for each employee reports total annual employee payroll hours, wages and total insurance premium contributions, along with the employer's contributions.
"Determining eligibility for the small-business tax credit is anything but cut-and-dry, and that's why we're seeing many employers shy away from it, leaving money on the table," said Kevin Hill, Paychex vice president of insurance and human resource services solutions. "In our role of partner and resource to our clients, it's our goal to ensure they have the tools they need to do what's best for them and their business. That's what we've done with these new tax credit resources."
Made possible through the new health care reform law, the tax credit is available to small businesses for tax years 2010 through 2013, and for any two years after that. To qualify for the tax credit, employers must have fewer than 25 full-time-equivalent (FTE) employees for the tax year, average annual wages of less than $50,000 per FTE, and contribute at least 50 percent of the single premium cost for each enrolled employee. The tax credit is available to employers who provide to their employees regular health insurance, and/or add-on dental or vision coverage.