Delivering Affordable Health Care To New Jersey's Small Businesses

October 08, 2010 10:21 am ET

In this economic climate, families and small businesses need the government on their side. For too long, partisan politicians have sided with big corporate donors at the expense of main street Americans. Until now. The new health care reform law provides tax breaks for roughly 126,800 small businesses in New Jersey that offer health insurance coverage to their employees.

Tax Credits For New Jersey's Small Businesses To Purchase Health Care

The Affordable Care Act Offers Tax Cuts To Roughly 126,800 Small Businesses In New Jersey. According to a report by Families USA and Small Business Majority, 126,800 small businesses (77.5 percent) in New Jersey are eligible for tax credits to defray some of the costs associated with employer-based health insurance. [A Helping Hand for Small Businesses: Health Insurance Tax Credits, Families USA and Small Business Majority, July 2010]

  • Small Businesses Are Eligible To Receive Tax Credits For Up To 35 Percent Of The Employer Premium Contribution. According to The Commonwealth Fund: "Between 2010 and 2013, the legislation provides tax credits for up to 35 percent of the employer premium contribution (which must be at least 50 percent of the full premium) for employers with fewer than 25 employees and average wages below $50,000. The full 35 percent tax credit is available to employers with 10 or fewer full-time employees and average wages of $25,000 or less and phases out for larger firms." [The Commonwealth Fund, 9/2/10]
  • By 2014, Small Businesses Will Be Eligible To Deduct Up To 50 Percent Of Their Insurance Premium Contributions For A Tax Credit. According to Small Business Majority: "Beginning in tax year 2014, the maximum tax credit increases to 50% of premium expenses and coverage must be purchased from a state health insurance exchange. This tax credit is available for a total of any two years."  [Small Business Majority, accessed 9/30/10]
  • Qualifying Small Businesses In New Jersey Will Be Eligible For Thousands Of Dollars In Tax Credits. Under the health care reform law, qualifying small businesses in New Jersey that provide health insurance for their workers will be eligible to receive a tax credit worth up to 35 percent of the average premium in the state. In 2014, that tax credit increases to 50 percent of the average state premium. According to the 2010 IRS health insurance cost estimate, in New Jersey a qualifying employer is eligible for a tax credit of approximately $1,962 per employee and $4,732 per family ($5,607 for individuals and $13,521 for families). [IRS.gov, accessed 10/4/10; IRS.gov, accessed 10/4/10]

Flexibility Means Many Small Businesses Qualify For Tax Credits...  

  • Employers With Part-Time Employees May Also Qualify For Tax Credits. Small businesses in New Jersey that rely on part-time employees may also be eligible for the health insurance tax credit if their employees' work hours do not add up to more than the equivalent of 25 full-time employees. The example given by the IRS is: "[A]n employer with 46 half-time employees (meaning they are paid wages for 1,040 hours) has 23 FTEs [full time employees] and therefore may qualify for the credit." [IRS.gov, accessed 10/4/10]
  • Businesses Can Receive A Federal Tax Credit For Health Care Even If They Already Receive A State Tax Credit. From Small Business Majority: "Small businesses can receive both a federal and state tax credit for providing health insurance to their employees. The new federal tax credit will not be reduced by state healthcare tax credits or subsidies (except in limited circumstances to prevent abuse of the credit) and it will be based on the entire employer contribution as long as the federal credit does not exceed the employer's net contribution." [Small Business Majority, accessed 9/30/10]

Opponents Of Health Care Reform Are Using A Change To IRS 1099 Filing Requirements To Stoke Fear And Mislead...

  • The 1099 Filing Requirement For Small Businesses Does Not Go Into Effect Until 2012. According to the Los Angeles Times: "Starting in 2012, the law would require all businesses to file special forms with the Internal Revenue Service not just for freelancers who work for them, as in the past, but also for stores, vendors and anybody else from whom they buy more than $600 in goods or services over the course of a year." [Los Angeles Times, 6/7/10]
  • Businesses Won't Have To File 1099s For Credit Card Expenditures. From the Tampa Bay Business Journal: "'Businesses that pay corporations by credit card won't have to file these 1099 forms,' said Michael Mundaca, the Treasury Department's assistant secretary for tax policy. That's because a separate law that goes into effect in 2011 will require payment card processors to file reports to the IRS on the amount of credit card payments that businesses receive every year. If a small business owner goes into a store and buys $600 worth of goods with a credit card, 'that will already generate a report, and therefore no additional reporting is required,' Mundaca said. Both provisions are examples of third-party reporting of income, which is designed to make sure businesses don't hide income from the IRS." [Tampa Bay Business Journal, 5/21/10]
  • There Is Bipartisan Support To Amend The 1099 Filing Requirement Before Its 2012 Implementation Date. According to the Wall Street Journal, Republican Senator Mike Johanns, who sponsored an amendment to repeal the 1099 reporting requirement, "was optimistic the 1099 rule would be changed before long." In addition, "Democrats said they agreed the 1099 requirement should be changed, but through a different route." [Wall Street Journal, 9/15/10]
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