New tax credit aimed at small businesses

By Johnny Jackson


More than 122,000 small businesses, statewide, are potentially eligible for a new tax credit which goes into effect this year, according to officials with the Internal Revenue Service.

The IRS is in the process of mailing out postcards to notify employers of the new tax credit, granted to small businesses and tax-exempt organizations that pay health insurance premiums, said IRS Spokesman Mark Green.

The IRS recently identified 122,967 small businesses and tax-exempt organizations in Georgia, and 4.4 million nationwide, as being potentially eligible for the tax credit.

Green said the credit is one of the first health-care reform provisions to go into effect since President Barack Obama signed into law, last month, the Patient Protection and Affordable Care Act.

Green added that the credit, which takes effect this year for the upcoming tax-filing season, is designed to encourage small employers to offer health insurance coverage for the first time, or maintain coverage they already have. It targets small businesses and tax-exempt organizations that primarily employ low- and moderate-income workers, and is generally available to employers who will pay at least half the cost of single coverage for their employees in 2010.

The credit potentially could affect several employers in the area, according to Greg Hammonds, a certified public accountant and partner at Robinson, Whaley, Hammonds & Allison, P.C., in McDonough.

Hammonds said that between 50 and 60 percent of the McDonough-based firm's small-business clients pay at least a portion of health insurance premiums for their employees.

Some of those employers, if they qualify, could get up to 35 percent credit on what they pay toward their employees' health insurance premiums, according to Green.

For tax years 2010 through 2013, Green said, the maximum credit is 35 percent of premiums paid by eligible small employers and 25 percent of premiums paid by eligible employers which are tax-exempt organizations.

The maximum credit goes to smaller employers who have 10 or fewer full-time employees and pay them an average wage of $25,000 or less annually, he explained, adding that the credit is completely phased out for employers with 25 or more full-time employees earning an average wage of $50,000 or more annually.

"Because the eligibility rules are based, in part, on the number of FTEs, not the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals," Green said.