The IRS encouraged both small businesses and tax-exempt organizations to explore and, if qualified, claim the new small health insurance coverage credit created by the Patient Protection and Affordable Care Act (P.L. 111-148), which is available beginning in 2010. The credit was created for eligible small businesses and tax-exempt organizations to either maintain their current health insurance coverage or to begin offering health insurance coverage to their employees.
The maximum credit amount is 35 percent of premiums paid by eligible small businesses and 25 percent for eligible tax-exempt organizations for 2010. The maximum credit amount will increase beginning in 2014 to 50 percent for eligible small businesses and 35 percent for eligible tax-exempt organizations. Generally. an eligible small business or tax-exempt organization is one that pays at least half the cost of single coverage, that employs less than 25 full-time equivalent employees, and that pays an average annual salary of less than $50,000. Small business will be able to claim the credit as part of the general business credit. The IRS will provide further guidance on claiming the credit for tax-exempt organizations. The IRS will also reach out to the business community by mailing a postcard with key information to potential qualifying small businesses.