Question

I am claiming the premium tax credit of health care premiums for employees. I am eligible to claim 35% of these premiums. How do I claim health care tax credit?

Answer

Assuming by your question that you are a small-business owner and you are claiming the premium tax credit available to you which is 35% of the health care premiums you paid out. To claim the maximum credit of 35% of premiums paid you must be a tax-exempt eligible small employer. For all other eligible small employers, the maximum credit is 50% of premiums paid.

You are an eligible small employer if you meet the following criteria:

  • You paid premiums for employee health insurance coverage under a qualifying arrangement.
  • You had fewer than 25 full-time equivalent employees (FTEs) for the tax year.
  • You paid average annual wages for the tax year of less than $52,000 per FTE.

If you meet the above criteria you will need to determine your small-business employer health care credit on Form 8941: Credit for Small Employer Health Insurance Premiums.

This form will help you determine the correct figure to include on Form 3800: General Business Credit, Part II.

Related Topics

Related Resources

Are COBRA Payments Tax Deductible?

Are COBRA payments tax deductible? Learn more from the tax experts at H&R Block.

Where’s my refund – North Carolina?

Looking for more information about your North Carolina refund? Find out details on how to check your refund status, who to contact, and more from H&R Block

4 Tax Write-Offs That Can Advance Your Career

Advancing your career may be a tax deductible work expense. Learn more about 4 tax write offs that fall in this category with the experts at H&R Block.

Where’s my refund – Massachusetts?

Looking for more information about your Massachusetts refund? Find out details on how to check your refund status, who to contact, and more from H&R Block.