Horizon Business Solutions Announces Savings of Over $34,000 for Clients Taking Advantage of Health Care Tax Credit in 2011

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Horizon Business Solutions of Ohio was able to save small business clients over $34,000 in taxes using the health care tax credit in 2011. A health care tax credit, available to small businesses is being under utilized. Horizon Business Solutions advises taking advantage of the credit and offers guidelines for businesses that qualify.

Save on Small Business Taxes - Take advantage of Health Care Tax Credits

"I think it's a great credit!" Tracy Russ, Horizon Business Solutions.

Tracy Russ, an accountant with Horizon Business Solutions (Horizon), says that in 2011 the small business health care tax credit saved their clients a total of $34,776. Out of 100 clients Russ says 16 received the credit. And while preparation for the credit does require a little extra work for both the client and the accountant, Russ says “On average, it takes 1 to 1.5 hours,” a small time investment for such savings.

Few businesses are taking advantage of the credit and Horizon is encouraging small businesses and tax-exempt organizations to do so. “Most other CPA firms do not have the internal knowledge to easily calculate the credit,” says Russ. Still, businesses that were eligible but neglected to claim the credit in 2010 can still claim it by filing an amended 2011 return.

According to the IRS, the credit can translate into as much as $30,000 in savings over a three year period. The credit is for small businesses and tax-exempt organizations. Small businesses are defined as businesses that employ 25 or fewer workers with average incomes of $50,000 or less.

Here’s how it works: small employers who pay at least 50 percent of health insurance premiums for employees qualify for a credit of up to 35 percent of the premiums paid for tax years 2010 to 2013. Tax-exempt organizations are eligible for a credit of up to 25 percent of premiums paid. Beginning in 2014, the credit will go up to 50 percent of premiums paid for small businesses and 35 percent of premiums paid for tax-exempt organizations.

“I think it’s a great credit,” says Horizon’s Russ, adding that while it is not a dollar for dollar credit, “the client is still ahead.”

Concerns over the potential impact of health care reform on small businesses have prompted the formation of several nonprofit small business advocacy groups, including the Small Business Majority. The New York Times quoted a study conducted by the group which concluded that half of companies with nine or fewer workers do not currently provide employee health coverage. The group concluded that many of the new changes benefit small businesses by helping them afford health benefits for their workers. The small business health care tax credit is one of the benefits to small business owners and tax-exempt organizations.

According to the New York Times, the group’s chief executive, John Arensmeyer says, “Small businesses want to be part of the system, adding, “They don’t want to shirk their responsibilities,” But, “the system needs to be fixed.”

While the tax credit provides a great benefit for many small businesses it is not without problems. Horizon’s Russ warns, “One problem lies with family stipulations. You can’t include members of a family working for a business….With small businesses it is common for family members to work there, so they typically don’t qualify for this reason.”

Still, the tax credit can provide relief for many small businesses and tax-exempt organizations and it is scheduled to provide even greater relief over the next 3 to 5 years. Horizon encourages both small business owners and other tax preparers to take advantage of any opportunities to keep help keep small business viable and to increase profits.

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Tracy Russ

Libby Lucas
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