Nonprofits nationwide might look forward to an increase in the refunds they receive for insurance premiums paid to employees’ health insurance when the Affordable Care Act rolls out the last phase of its legislation in January.
Federal legislation in 2010 included a provision that gives small employers, including nonprofits, the right to receive a Small Business Health Care Tax Credit that acts as a refund on quarterly payments nonprofits make to the IRS for income tax withholdings or Medicare withholdings from employee wages.
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joel brandes says
I thought non-profits didn’t pay tax. If so what good would a tax credit do them?
joel brandes says
Isn’t the money paid for employee health care by a for profit tax deductible as a business expense? Therfore giving them a tax credit for something they didn’t pay tax for in the first place is rather strange.
Vic Pfeiffer says
Joel:
US employers (for profit & not-for-profit) pay withholding “taxes” (Medicare, Social Security, State, Local, etc.) for their employees. These are different from taxes a corporation pays. As I understand this article, the tax credit applies to these withholding payments.