IRS Guidance on the Small Business Health Care Tax Credit

The new health care reform law provides a valuable tax credit to some small employers that provide health insurance coverage to their employees. The credit is available beginning this year to employers that pay at least half the cost of their employees' health coverage, have fewer than 25 employees (or an equivalent number of part-time workers) and average wages of less than $50,000, and meet certain other requirements. An eligible small employer could reduce its health plan expenses by up to 35% by taking advantage of the credit. The Internal Revenue Service (IRS) has recently published important guidance that explains which employers qualify for the credit and how the credit is computed and claimed for tax years beginning in 2010 through 2013.