Does Your Nonprofit Qualify for the Health Care Tax Credit?

Maribeth Wright | December 14th, 2011

Wouldn’t your not-for-profit organization love to find an additional $500 to $5000? Nonprofit groups are often surprised to find that they may qualify for the small business healthcare tax credit, which began in 2010. The credit, which applies to both for-profit and nonprofit entities, has already netted several of our clients between $500 and $5000 in refunds for the 2010 tax year.

Your organization could qualify for the healthcare tax credit if it:

–          Provides at least 50 percent of the cost of healthcare coverage for some its workers

–          Has less than the equivalent of 25 full-time workers

–          Pays an average annual wage below $50,000

The credit is worth up to 35 percent of a for-profit small business’ premium costs in 2010 and 25 percent of tax-exempt employers’ premium costs. The percentage will increase January 1, 2014 to 50 percent for for-profit entities and 35 percent for tax-exempt employers. The credit gradually fades out for organizations with average wages between $25,000 and $50,000 and for entities with between 10 and 25 full-time employees.

The form 990T enables tax-exempt organizations to apply for the healthcare tax credit. If you’ve already filed your 2010 fiscal year tax return, you can make an amendment. To see if your organization qualifies or to receive additional information about the credit, please contact your tax professional.

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