Small Employer Health Insurance Credit As part of the Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act, qualified small employers can take a credit up to 35% of the health insurance premiums paid for their employees. For tax years beginning in 2010 - 2013, a qualified small employer has no more than 25 full-time equivalents (FTE) and average annual wages less than $50,000. The credit is reduced for employers with more than 10 FTE's and for employers with average wages above $25,000. The employer must pay at least 50% of the employees' premiums. Sole proprietors and partners as well as their close relatives are not treated as employees and therefore their wages and premiums are excluded from the credit.
FICA tax increase Starting in 2013, the Medicare (or Hospital Insurance) tax rate of 1.45% will increase to 2.35% for wages over $200,000 for single filers, over $250,000 for married filing jointly filers and over $125,000 for married filing separately filers. The self-employment tax will also increase from 2.9% to 3.8%. Starting in 2013, a new Medicare Contribution tax of 3.8% will be assessed on the lesser of net investment income or the excess of modified adjusted gross income over the same thresholds as above. Net investment income includes but is not limited to interest, dividends, rents, and passive activities.
The information provided here is in summary form and does not reflect the IRS tax codes, applicable state tax codes, Federal Acquisition Regulations or any other regulatory codes in their entirety.If a particular situation may be applicable to you, please consult your CPA or tax advisor.
Cheryl Jefferson & Associates, LLC CPA | Consultant 8950 Old Annapolis Rd, Suite 219 | Columbia, MD 21045 | 410.772.0065
