To earn your tax credit, your nonprofit must meet all 3 of the following criteria:
- The nonprofit employs fewer than 25 full-time-equivalent (FTE) employees
- The average annual wage of the employees is less than $50,000
- The nonprofit organization pays at least 50% of the premium costs for employee-only coverage
Keep in mind that part-time employees can be added together to equal FTE employees. Seasonal employees are not counted when determining eligibility unless they work more than 120 days during the year.
The good news is that tax-exempt organizations can qualify for the credit even if they do not owe any income taxes. They will receive a credit against payroll taxes or income taxes withheld in 2010.
- The value of the tax credit is based on the organization’s contribution to employee health care.
- The maximum tax credit for 2010-2012 was up to 25% of the organization’s’ contribution to health care coverage for its employees. Due to sequestration, the full credit amount for 2013 is 16.3%.
- The full credit is for organizations with fewer than 10 employees, averaging less than $25,000 in annual wages. This credit phases out at 25 employees averaging $50,000 and above in annual wages.
If your nonprofit participates in the Maryland Health Insurance Partnership, a state grant program that provides grants to help organizations start providing health care, it will not decrease the amount of your tax credit.
Also, beginning in 2014, eligible nonprofit organizations purchasing coverage through Maryland’s Insurance Exchange will receive tax credits of up to 35% of the organization’s contribution if the organization pays at least 50% of the employee-only premium costs. A nonprofit organization can claim the credit for any two years after 2014.
Use the tax calculator below to estimate the amount of your tax credit TODAY!
Talk with your accountant and/or tax preparer! Make sure that he or she fills out Form 990-T and attaches the new Form 8941.
Don’t have an accountant or tax preparer? Call us at (410)235-9000 to speak with our knowledgeable staff!
If you currently don’t offer health care and are interested in beginning, or you’d like to compare plan costs, visit CareFirst BlueCross BlueShield for more information on health care plans for your business and the federal tax credit, at www.carefirsttaxcredit.com.