Here I am an expert on cash management and I am looking for any way possible to get some cash back into my client’s hands.  After all our tag line at B2B CFO^® is  

                Cash.  We Help You Get It. ^SM

In April a local firm put on a seminar related to a new tax credit for small employers.  I was not available to attend, but my partner Manus was good enough to share the slides and notes from the seminar.

My first reaction to the health care reform bill was how in the world is anyone going to make sense of this new reform.  But here we are with various individuals giving us the guidance we need.  After checking with a couple of sources I finally had the sense to go to the IRS website.

In the end everyone who thinks they qualify will need to check with your qualified tax expert and make sure they are aware of these changes – I have little doubt they will be very aware of this change.  So, since the government is offering I think it would be a shame to miss out on the opportunity. 

Here is the information being reported on the IRS Website.

“Many small businesses and tax-exempt organizations that provide health insurance coverage to their employees now qualify for a special tax credit, according to the Internal Revenue Service.

Included in the health care reform legislation, the Patient Protection and Affordable Care Act, approved by Congress and signed by President Obama on March 23, the credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.

The maximum credit is 35 percent of premiums paid in 2010 by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. In 2014, this maximum credit increases to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible employers that are tax-exempt organizations.

The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low and moderate income workers. It is generally available to employers that have fewer than 25 full-time equivalent (FTE) employees paying wages averaging less than $50,000 per employee per year. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers.

The maximum credit goes to smaller employers — those with 10 or fewer FTEs — paying annual average wages of $25,000 or less.

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt employers, the IRS will provide further information on how to claim the credit.”

To determine the number of full time employees (FTE)…

·         Add the total number of hours worked of all full time and part time employees (but not more the 2080 hours total for any employee)

·         Divide by 2080 and round down to the nearest whole number

The average wages are determined by

·         Divide the total amount of wages (as defined for FICA purposes) by

·         The number of FTEs and round down to the nearest $1,000.

 So as the IRS so elequently put it, stay tuned for more.