Smart Benefits: Why Aren’t More Companies Taking Small Business Tax Credit?
Monday, April 11, 2016
The tax credit is worth up to 50% of an employer’s contribution (up to 35% for tax-exempt employers). It is available to eligible employers for two consecutive taxable years. Even if a business didn’t owe tax during the year, it can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments is more than the total credit, eligible small businesses can still claim a business expense deduction for premiums in excess of the credit.
So why are only a fraction of eligible businesses taking the credit?
According to a March Government Accountability Office report, only about 181,000 employers in 2014 claimed the credit, a relatively low number compared to the number of employers eligible for the credit, which GAO estimated to be between 1.4 million and 4 million.
The reasons GAO cited for the limited participation:
- The maximum amount of the credit doesn’t appear to be a large enough incentive for employers to offer or maintain insurance.
- Few small employers qualify for the maximum credit amount.
- For those employers who do claim the credit, the credit amount “phases out” to zero as employers employ up to 25 full time equivalent (FTE) employees at higher wages.
- The amount of the credit is also limited if premiums paid by an employer are more than the average premiums for the small group market in the employer’s state.
- The credit can only be claimed for two consecutive years after 2013.
- The cost and complexity involved in claiming the tax credit is significant.
- Many small businesses are unaware of the credit.
To learn more about the credit and whether a business is eligible, the IRS offers information here. Businesses must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. Tax-exempt organizations should include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. The Form 990-T must be filed to claim the credit even if an organization doesn’t ordinarily do so.
Related Slideshow: 25 Ways to Support Small Businesses in RI
Grab a Snack
8 Bowen’s Wharf, Newport
Signature almond butter toffee hand-crafted in small batches with the best ingredients. Almonds, sweet cream butter, pure sugar, salt and dark chocolate are skillfully piloted through heat and cold to create a classic treat you can’t resist.
Shop for Dad
39 Warren Ave, East Providence, RI
Not sure what to get dad for the holidays?
Go out together and be entertained at East Providence’s Comedy Connection where local and international acts like Norm MacDonald, DL Hughey, and Carlos Mencia are currently set to perform!
Shop for Mom
154 Mill Street, Newport
Inspired by music, art and the laid-back vibes of the West Coast, this women's wear boutique offers a merchandise assortment consisting of statement pieces from contemporary brands not typically found in local shops.
Shop for Someone Special
180 Pleasant View Ave, Smithfield, RI
Get that special person in your life a gift to remember this holiday.
AC Jewelers can create custom wedding bands, engagement rings and even has a selection of pre-owned Rolex’s and other fine jewelry to suit any taste.
Photo: AC Jewelers
Shop for a Difficult Buy
14 Imperial Place, Providence, RI
Do you have someone on your list that is very hard to buy a gift for?
Try giving them a different type of relaxing experience with Emerging Energy Acupuncture they offer acupuncture, massage, and herbology services to sooth the body and the mind.
Take a Break
184 County Rd, Barrington
Take a break from your Christmas list and head over to Barrington Books.
They have a wide selection of art, philosophy, fiction, and even a graphic novel section to spark your curiosity.
Grab Some Lunch
1357 Hartford Ave, Johnston, RI
In a rush? Luigi’s Restaurant & Gourmet Express offers authentic Italian Cuisine that is already prepared and ready to eat at your request!
Sit in or take your meal on the go.
Photo: Luigi's Restaurant and Gourmet Express
Even More Lunch!
156 County Rd, Barrington, RI
If you’ve got a hearty appetite and love Thai food try Tong D Restaurant for lunch during your shopping excursions.
Tong D has an amazing selection of spicy curry, savory rice, and delicious noodle dishes and even offers vegan selections.
Do Something Creative
99 Spring Street, Newport
A community space, bringing together artists and creatives while providing a storefront location to display and sell local artwork and apparel.
Participate in and Event
801 Greenwich Ave, Warwick
Small Business Saturday Shop RI at the Crowne Plaza in Warwick from 9 a.m. to 4 p.m.
The event will feature over 100 Rhode Island Small Businesses and vendors including entrepreneurs, artists, Farm Fresh RI, Social Venture Enterprises, veterans, and minority-owned businesses.
Get Some Retail Therapy
6 West Marlborough Street, Newport
Offers the latest fashion trends for men and women at an affordable price.
The flagship store is located in Narragansett.
Get Ready for a Night Out
9 Pier Market Pl, Narragansett, RI
Spa Thayer will have a special on gift certificates: buy one gift certificate and get one 50% off any combination of services.
Don’t forget to book yourself and appointment this Saturday to freshen up after a long holiday weekend, and enjoy 10% off in spa credit.
Grab Yourself a Treat
21 Charles St., Wakefield, RI
Get some retail therapy at Sweenor’s Chocolates and take home a treat for yourself, and your loved ones - but mostly yourself.
Choose from their assorted boxed chocolates, fudges, and sugar-free candies.
Photo: Sweenor's Chocolates
Improve Your Space
444 Boyds Ln., Portsmouth, RI
Grab some fresh blooms this holiday from Mello’s Farm and Flowers Center.
The family owned and operated business also offers poinsettias, trees, and wreaths to decorate your home with this holiday.
Photo: Mello's Farm and Flowers Center
Out With the Old
32 Gooding Avenue, Bristol, RI
Replace some gently used items around your home and get money back to replace them at Second Helpings.
The consignment shop also has plenty of furniture and stylish home goods to revitalize your space.
Photo: Second Helpings
328 Atwood Ave - Cranston RI
Second Time Around Sports has plenty of new and gently used sports gear for the athlete in your family.
They also offer special deals on ski and snowboard goods in store - perfect for winter sports during their race to black Friday event which extends all weekend.
Solve a Problem
Bad Dog Tools
24 Broadcommon Rd., Bristol, RI
Bad Dog Tools’ staff can help you find the right tools for the job.
Replace your old drill bits, saw mills and more so you can get back to work on your home improvement project.
Don't Forget Fido
Pet Foods Plus
30 Gooding Ave., Bristol, RI
Pet Foods Plus has a wealth of accessories and new foods and treats to keep your pets happy this winter.
Don’t forget your best friend while out on your holiday shopping spree!
Grab a Drink
95 Eddy St, Providence, RI
The Eddy is one of the coolest places to grab a cocktail before you make your rounds for the weekend.
Enjoy a signature creation like their “Orange Julius Caesar”, “Solera Flare” or “Up All Night…” cocktails made fresh and don’t forget to grab a bar snack!
Photo: The Eddy
Enjoy Local Atmosphere
276 Westminster St., Providence, RI
Aurora features live music, great drinks, and an even better atmosphere. A great way to spend Small Business Saturday.
Enjoy a Show
260 Thayer St, Providence, RI
The Avon Cinema will be playing new independent and foreign films in an intimate atmosphere.
Find out what’s playing soon and don’t forget your popcorn!
Buy Cool Memorabilia
537 Pontiac Ave, Cranston
Comics, records, toys, video games and more, The Time Capsule in Cranston is a great place for holiday shopping during Small Business Saturday.
The Time Capsule opens at 11 a.m. on Saturday.
60 Dorrance St, Providence, RI
The Dorrance has an ever-changing cocktail menu and is just a stone’s throw away from other bars like G Pub, Circe, and Congress.
The Dorrance is the perfect spot to start the night right and grab some seriously tasty bar food like their Rhody Calamari, and Duck Confit and Pumpkin.
Photo: The Dorrance
Grab A Late Night Snack
121 Washington St., Providence, RI
Grab some dessert after a long day of shopping and a night of festivities at Local 121.
Choose from their créme brûlée or homemade ice cream and sorbet collections.
Photo: Local 121
- Smart Benefits: ACA Insurance Reforms Finalized
- Smart Benefits: CMS Proposes Improvements for Marketplace
- Smart Benefits: 10 Days to Shop for New HealthSource Plan for Jan. 1
- Smart Benefits: Boost Employee Retirement Contributions in the New Year
- Smart Benefits: ACA’s “Cadillac Tax” Delayed
- Smart Benefits: Private Employers Offer Loan Repayment to Attract Young Workers
- Smart Benefits: Retirement Plan Contribution Limits Remain Unchanged for 2016
- Smart Benefits: Small Businesses Remain Those with 50 or Less Employees
- Smart Benefits: Benefits Increasingly Key to Recruitment
- Smart Benefits: Important Reminders for 2016 Exchange Open Enrollment
- Smart Benefits: Maximize Deductions & Attract Employees With Fringe Benefits
- Smart Benefits: Year-End ACA Tax Tip for Employers
- Smart Benefits: ACA Employer Reporting Deadlines Extended
- Smart Benefits: Three Hot HR Topics for 2016
- Smart Benefits: New ACA Litigation - Dave & Buster’s Dismissal Denied
- Smart Benefits: Beware - ERISA Enforcement Recoveries Hit $696.3 Million in 2015
- Smart Benefits: With Millennials, Creativity is Key to Benefits
- Smart Benefits: Deadline Looming for IRS Forms
- Smart Benefits: Exchange Enrollment Figures In
- Smart Benefits: Federal Appeals Court Upholds ACA Contraceptive Mandate
- Smart Benefits: IRS Releases New ACA Guidance
- Smart Benefits: Boost Benefit Engagement in 2016
- Smart Benefits: Large Employers May Have to Report Pay Data
- Smart Benefits: Get your Documents in Order for a DOL Audit
- Smart Benefits: One Week to Get Insured – or Pay