Health Care Act of 2010 Employee Health Insurance Tax Credit
Thursday, June 3, 2010 at 6:42PM TAX CREDIT FOR PAYING EMPLOYEES’ HEALTH INSURANCE
TAILORED TO DENTISTS
The Health Care Act of 2010 has a provision for extending tax credits to a business that pays for their employees’ health insurance. The act limits the credit to a business with less than 25 employees. Since the average dental practice usually has significantly less than 25 employees, dental practices should evaluate the cost benefit of paying 100% of health insurance premiums for their full time employees.
How the credit works:
Company pays 100% of the health insurance for full time employees
The initial credit is calculated as follows:
Number of Full Time Employees x Average Insurance Premium = Base Amount
Base Amount x 35% = Initial Credit
The initial credit is subject to phase out limitations at two levels:
- Based on having a number of employees <25
- An average annual wage of <$50,000.
Due to the small size of the average dental practice, employing less than 25, plus the average annual wage is less than $50,000, these factors allow for a potential tax credit to be taken by the business owner.
In addition, the state of Arizona has credits available depending if your practice is located in a business enterprise zone and if you pay for employee health insurance.
Given the availability of credits at the federal and state level we recommend you consult with Price Kong regarding how you can best utilize these credits to reduce your overall income tax liability. Maximizing available credits in concert with other tax opportunities such as retirement planning could lead to significant tax savings and elevate your practice to attract and retain the premium employee your practice needs to excel.
If you are interested in learning more about the Price Kong approach to dental practice accounting and how we leverage and integrate tax planning, income tax preparation, accounting procedures and financial controls, please contact Chris Torregrossa, CPA.
Christopher Torregrossa, CPA
Director Dental Practice Group
Price Kong & Company
Chris@pkcpa.com
(602) 776-6317