Small Businesses Tax Credits Begin in 2010

Under the new healthcare reform law, companies (this includes medical practices) with fewer than 25 employees and average annual wages of less than $50,000 will be eligible for a credit for certain contributions to purchase health insurance for employees.  The credit phases in from 35% of the employers contribution to 50% by 2014. Smaller medical practices with 10 or fewer employees and average annual wages of less than $25,000 can get up to a 100% credit. The credit is effective for taxable years beginning after 2009.

Not included in the definition of an employee are seasonal workers, self employed individuals, 2 percent shareholders of an S Corporation , 5% owners of a small business, and dependents. Leased employees are eligible for the credit. These rules are effective as of date of enactment.