The Small Business Health Care Tax Credit

The Small Business Health Care Tax Credit

This is the latest in an effort to make health insurance more affordable to small businesses and not-for-profits.

Who is (generally) eligible?

• Have to provide health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
• 
  Cant be too large. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
• Cannot pay your workers too much (Highly compensated managers could hurt your average)            A qualifying employer must pay average annual wages below $50,000.

How much is the credit?

• The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
  As with any IRS credit there is a Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

The IRS has even taken the time to post a video on YouTube to help taxpayers and preparers alike understand the credit and how to qualify. You can find the youtube link here.

Are Fines, Penalties, or Violations Tax Deductible?

Are Fines, Penalties, or Violations Tax Deductible?

No. Neither are parking tickets while on a business meeting or health department violations for your restaurant. 

According to Internal Revenue Code Sec 162, you cannot deduct fines or penalties paid to the government.  This includes local, state, federal & foreign.  Bottom line, the IRS does not want to promote breaking the law.

So even though you may have received that parking ticket because your business meeting ran 15 minutes too late, that expense is not tax deductible.

However, if you are fined by a local government and hire an attorney or CPA to represent you in litigating / addressing the case; those fees are tax deductible.