As the Affordable Healthcare Act goes into effect in 2014, most businesses are bracing for an increase in taxes. However, the Small Business Healthcare Tax Credit could help to reduce that burden for qualifying small businesses.

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Who's Eligible for the Small Business Healthcare Tax Credit?

To be eligible for the credit, small businesses must:
- Have fewer than 25 full time employees. Currently, the IRS considers two half time or part time employees to equal full time, so if a small business has 50 part time employees, they will be counted as 25 full time. If the business has a combination of full time and part time, the credit only applies so long as the calculated total is 25 or fewer.
- Have employees with an average annual wage of $50,000 or less (calculated as the total wages paid to the employees, divided by the number of employees).
- Pay at least half of the premium cost for each employee.

What Types of Businesses Qualify?

Qualifying small businesses don't need formal offices or separate addresses. The IRS specifically notes that home-based employers can also qualify for the credit, as well as farmers and other individuals who are in similar circumstances.

How Can the Credit Be Claimed?

According to the IRS, one of the changes between 2010 and 2014 is that the tax credit has increased from 35 percent to 50 percent of the premium amounts that the employers paid, so long as key factors are met. But this tax credit can only be claimed for two consecutive tax years, starting in 2014. The credits may be continued, but this has not yet been decided.

How Do I Claim the Small Business Healthcare Tax Credit?

If you want to claim the credit, you must attach the Credit for Small Employer Health Insurance Premiums, also known as Form 8941 with your tax return. If your small business is tax exempt, then you would use Form 990-T. These can be mailed in or filed electronically.

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