By Philip Timothy, Message Staff Writer
Many of Louisiana’s 1,600 churches are eligible for a tax credit as part of the ‘Patient Protection and Affordable Care Act,’ and should take advantage of it, LBC leaders say.
The new small business health care tax credit is specifically targeted to help small businesses and tax-exempt – 501 (c)(3) – organizations, such as religious, educational and charitable groups.
Included in the Patient Protection and Affordable Care Act, the credit is one of the first of several new health care reform provisions to go into effect. Available for 2010, the credit encourages small businesses and tax-exempt organizations to offer health insurance coverage for the first time or maintain current coverage.
“Assuming the law is not repealed, this tax credit will impact quite a few of our churches in the state,” said Rusty Johnson, supervisor of the LBC accounting department. “All applicable participants should really take advantage of the tax credit.”
Last April, the Internal Revenue Service (IRS) sent out more than 4 million postcards – more than 60,000 in Louisiana alone – to alert small businesses and tax-exempt organizations about the health care tax credit.
“We wanted to make sure small employers across the nation realize that – effective this tax year (2010) – they may be eligible for a valuable new tax credit. Our postcard mailing – which is targeted at small employers – is intended to get the attention of small employers and encourage them to find out more,” IRS Commissioner Doug Shulman said. “We urge every small employer to take advantage of this credit if they qualify.”
For tax-exempt organizations, the credit can pay up to half the cost of single coverage for their employees in 2010. For tax years 2010 to 2013, the maximum credit is 25 percent of premiums paid by eligible employers of tax-exempt organizations.
The maximum credit amount will increase to 35 percent in 2014 and 2015 for eligible tax-exempt organizations, although many additional requirements will apply in those two years.
Generally, an eligible tax-exempt organization is one that pays at least half the cost of single coverage, employs less than 25 full-time equivalent (FTE) employees, and pays an average annual salary of less than $50,000. The maximum credit applies to those tax-exempt organizations with no more than 10 full-time FTEs paying average annual wages of $25,000 to $50,000.
Small tax-exempt employers will be able to claim this non-refundable credit against payroll taxes.
“The treasurer of the church can fill out the forms,” Johnson said, “But if you have any questions, it is best to contact a CPA for clarification or assistance.”
More information about the credit is available on IRS.gov.