Refundable Health Care Credit Available to Tax-Exempt Organizations
employers, including tax exempt organizations, may qualify for a tax
credit to reimburse a portion of the cost of employer-provided health
insurance as a result of the Patient Protection and Affordable Care
Act enacted on March 23, 2010.
For tax exempt
employers the credit is "refundable" meaning employers qualify
for the credit despite the fact that they may have no taxable income or
income tax liability. For tax exempt organizations, the credit is
claiimed as an offset against federal income tax withholding and both
the employer and employee share of the 1.45% Medicare tax. The credit
is claimed by filing IRS Form 990T.
This credit is
available to 501(c) organizations that are exempt from income tax under
Section 501(a) and meet the following three criteria:
less than 25 full time equivalent (FTE) employees during the year,
2) Pay average wages per FTE of $50,000 or less,
3) Contribute a uniform percentage of at least 50%
toward employee health care premiums.
The tax credit
amount, which is shown below, is based upon a percentage of the health
insurance premiums paid:
Organizations that believe they meet the criteria to
qualify for this credit should contact Smith Schafer. Our professionals
can assist in calculating the amount of the refund and process the
filing of the refund with the IRS.