Jim Bobs Doggie Barn, a for-profit employer, employed 25 full-time employees in

Question

Jim Bobs Doggie Barn, a for-profit employer, employed 25 full-time employees in 2017 and paid $100,000 in premiums for health insurance covering all its employees. If the premiums paid represent 100% of the employee coverage cost and the average wages paid per full time employee were $27,000, for what tax credit is the company eleigible? Jim Bobs Doggie Barn, a for-profit employer, employed 25 full-time employees in 2017 and paid $100,000 in premiums for health insurance covering all its employees. If the premiums paid represent 100% of the employee coverage cost and the average wages paid per full time employee were $27,000, for what tax credit is the company eleigible?

Explanation / Answer

Conditions to be fulfilled for a small business to avail premium tax credit are:

1. The employer should employee less than or equal to 25 employees.

2. Pay less than 50,000 $ as wages in the year.

3. Pay at least half of the employee health insurance premiums. The health covers should be purchased from SHOP small business health option programme market place.

Jim's firm fulfills all the conditions and we assume that he purchased the insurance covers from SHOP.

Therefore he is eligible for 35 of premiums paid.

Maximum eligible credit = 100000*0.35= 35000$

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