The countdown to tax day is on and it’s safe to assume you’re either gathering receipts and scrambling to fill out forms or putting off the inevitable for yet another day. Either way, when you do sit down to scrutinize every last detail in your attempt to keep as much of your profits this year as possible, it’s important to keep in mind a nice new development: you may qualify for the new federal healthcare tax credit. The prospect of getting some money back from the government may even be an incentive to tackle those forms sooner than later.
If your small business has fewer than 25 full-time equivalent employees with average annual wages below $50,000, you can claim a credit of up to 35 percent of your healthcare premium costs on your 2010 federal tax returns. This much-needed extra cash is made possible by the Affordable Care Act, the new healthcare law, and provides relief to small businesses struggling to cover their workers without breaking the bank.
In July of last year we released a study that found that more than four million small firms in the United States, or 83.7 percent, are eligible for the credit. We're hearing from numerous entrepreneurs around the country who say they’re already feeling the positive effects and are able to purchase health insurance for their employees for the first time thanks to this provision of the new law.
For instance, Jamal Lee, owner of Breasia Studios in Laurel, Maryland is now able to provide health coverage to his employees for the first time thanks in part to the tax credits. Offering insurance will help him retain and attract a valued staff and keep them healthy. Others are finally getting some relief from the soaring cost of health insurance. In Salt Lake City, bookstore owner Betsy Burton offers health benefits to her employees, but because of ever-increasing costs in years past almost had to drop coverage just to stay in business. The tax credits are putting $21,000 back in her bookstore’s coffers, money she needs to maintain coverage for her workers. These are just two examples of real employers seeing substantial relief from the Affordable Care Act. Yet many small business owners aren’t aware of the tax credits.
In January 2011, Small Business Majority released a national poll of 619 small business owners that gauged their views on provisions of the new healthcare law, including the tax credits. One-third of employers who currently don't offer coverage said they are more likely to because of the tax credits. Moreover, 31 percent of those who already provide health insurance, including 41 percent of small businesses with 3-9 employees, said the tax credits will make them more likely to continue offering coverage. Unfortunately, the conversation on the Affordable Care Act has focused on the politics of its implementation rather than the advantages it offers small businesses. What gets lost in the headlines and political punditry are things like the tax credits. Our survey also found that 57 percent of small business owners don’t realize the credits exist.
It’s okay for us to have rational differences over the Affordable Care Act, but it's absurd to argue against the positive impact provisions like tax credits will have on small employers—the very people who create most of the nation’s jobs. When small business owners can save money on their healthcare expenses, they have more funds to expand their businesses. That's why small business owners need to know these tax credits are here to help them. Let’s spread the word so entrepreneurs get more bang for their buck.
John Arensmeyer is the founder and CEO of Small Business Majority.
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