Small employers face two tax filing deadlines in the coming weeks in order to take advantage of tax credits offered under health care reform.
Employers that have up to 25 employees, pay average annual wages below $50,000, and provide health insurance may be eligible for a small business tax credit of up to 35 percent (up to 25 percent for nonprofits). The credits are offered to help offset the cost of providing health insurance.
[See also: Take advantage of small biz tax credits]
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In order to take advantage of these tax credits, you must file by a certain date. Here are two important tax filing deadlines in coming weeks that you should be aware of:
- September 15. Corporations that file on a calendar year basis and requested an extension to file to September 15 can calculate the small employer health care credit on Form 8941 and claim it as part of the general business credit on Form 3800, which they would include with their corporate income tax return.
- October 17. Sole proprietors who file Form 1040 and partners and S-corporation shareholders who report their income on Form 1040 have until October 17 to complete their returns. They would also use Form 8941 to calculate the small employer health care credit and claim it as a general business credit on Form 3800, reflected on line 53 of Form 1040.
The Department of Health and Human Services and the IRS have announced an outreach effort to educate eligible businesses. The campaign includes YouTube videos,
in English, Spanish and American Sign Language. Targeted e-mails and tweets will be sent to the small business community and tax preparers. The goal is to remind employers about the upcoming extension deadlines and also provide details on other important information about the credit, including:
- Businesses who have already filed can still claim the credit: For small businesses that have already filed and later determine they are eligible for the credit, they can always file an amended 2010 tax return. Corporations use Form 1120X and individual sole proprietors use Form 1040X
- Businesses without tax liability this year can still benefit: The Small Business Jobs Act of 2010 provided that for Tax Year 2010, eligible small businesses may carry back unused general business credits (including the small employer health care tax credit) five years. Previously these credits could only be carried back one year. Small businesses that did not have tax liability to offset in 2010 should still evaluate eligibility for the small business health care tax credit in light of this expanded carry back opportunity.
- Business that couldn't use the credit in 2010 can claim it in future years: Some businesses that already locked into health insurance plan structures and contributions for 2010 may not have had the opportunity to make any needed adjustments to qualify for the credit for 2010. So these businesses may be eligible to claim the credit on 2011 returns or in years beyond. Small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.
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