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Small business health care tax credit

Generally, all employees who perform services for you during the tax year are counted in determining your FTEs, average annual wages, and premiums paid.

Generally, you can calculate your FTEs by adding the hours of service of all your employees and then dividing that by 2,080 (which is a full-time employee, 40 hours per week at 52 weeks per year).

Former employees

Premiums paid on behalf of a former employee with no hours of service may be treated as paid on behalf of an employee for purposes of calculating the credit provided that, if so treated, the former employee is also treated as an employee for purposes of the credit. uniform percentage requirement.

Leased Employees

Do not use the premiums paid by the leasing organization to calculate your credit. In addition, a leased employee who is not a common law employee is considered an employee for credit purposes if he does all of the following:

  • Provides services to you under an agreement between you and a leasing organization,
  • You have performed services for yourself (or yourself and a related person) substantially full-time for at least 1 year, and
  • Performs services under your principal direction or control.

But do not use the hours, wages, or bonuses paid with respect to the initial year of service on which the leased employee’s status is based.

seasonal employees

Employees who perform labor or services on a seasonal basis and perform labor or services for you for 120 days or less during the tax year are not considered employees in determining FTEs and average annual wages. But premiums paid on your behalf are counted in determining the amount of the credit.

Seasonal workers include retail workers employed exclusively during the holiday seasons. Seasonal workers also include workers employed exclusively during the summer.

Domestic employees and other non-commercial employees

Domestic employees and other employees who do not perform services in your trade or business are considered employees if they meet the requirements listed above. A sole proprietor must include business and non-business employees in determining FTEs, average annual wages, and premiums paid.

ministers

A minister serving in the course of his or her ministry is treated as self-employed for Social Security and Medicare purposes.

However, for credit purposes, whether a minister is an employee or self-employed is determined using the common law test to determine the status of the worker. Autonomous ministers are not considered employees.

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