Posted: 11:15 am Tue, August 14, 2012 By DanHeilman Tags: Andrew R. Biebl, CliftonLarsonAllen, Health Care, Internal Revenue Service, Lehrman Flom & Co., Small Business Health Care Tax Credit, Steve Warren, U.S. Patient Protection and Affordable Care Act

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Buried deep in the health care reform law is a provision that seems set up to reward small businesses for providing health coverage for their employees. But does it really do that or much of anything?

The Internal Revenue Service has said that 15,400 small businesses are eligible for the Small Business Health Care Tax Credit, which is aimed at making health insurance more affordable for their employees.

Congress created the tax credit (available on IRS Form 8941) in 2010 as part of the overhaul of the health care system, and it was intended to be an incentive for small businesses to offer health insurance.

But companies and their accountants have found that the process for filing a claim is top-heavy, and the potential credits start to vanish if businesses dont meet exacting standards.

Nobodys using it, and not because they dont know about it, said Andrew R. Biebl, a certified public accountant and partner with CliftonLarsonAllen in Minneapolis.

The U.S. Patient Protection and Affordable Care Act of 2010, whose constitutionality was upheld in June by the U.S. Supreme Court, provides a tax credit thats 35 percent of a businesss health premium as long as the business meets a three-part standard:

The instructions should be reviewed [by] anyone considering completing the form, said Steve Warren, CPA, and director of taxation with Lehrman, Flom & Co. in St. Louis Park. The calculation can be relatively time-consuming and complex.

Assuming your business meets the three criteria, you would look at all of your health premiums and compute 35 percent of that as your tax credit. If youre a nonprofit, its 25 percent of the premiums. Also, the law doesnt require a timely election, so business owners who have missed out to this point can file two amended returns to claim back credits.

See the article here:

Health care tax credit available for business owners, but is it worth the headache?