I remember when I got my first job after college. I wasn’t making much, but it was way more than I’d ever made before. Next thing you know, the first of the year rolled around and all of a sudden it was tax time. Very much to my surprise, I got a pretty darn big refund (relatively speaking). The next year, I was excited to do my taxes because I was ready to spend my refund check.
Funny how things change. Like most small business owners, the days of me getting a refund are long gone. For full disclosure, I’m a DINK—Dual Income, No Kids—so nowadays I pretty much dread April 15th. And this brings me to the point of this blog. Finally, right? I accept that it is my duty to pay taxes. But I also understand that there are very real ways to legally reduce my total tax bill.
Enter the Small Business Health Care Tax Credit. This credit – please remember the huge difference between a credit and a deduction – can prove incredibly valuable to small businesses that provide health insurance to employees. A small business with 10 employees (at an average wage of 28,000) that pays $200 per month per employee towards premiums could be eligible for a credit of as much as $7392. That’s a long way from pocket change. In fact, that credit covers more than 30% of the $24,000 in premiums paid by the employer over the course of the year, effectively taking the cost of insurance from $24,000 to $16,608.
If you’re a small business owner that provides health insurance, you deserve to be rewarded. Guess what, this credit is part of it. If you qualify, please be sure to take advantage of it.