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2015 Year-End Tax Planning for Businesses #3

November 19, 2015

Business Credits

Small Employer Pension Plan Startup Cost Credit: Certain small business employers that did not have a pension plan for the preceding three years may claim a nonrefundable income tax credit for expenses of establishing and administering a new retirement plan for employees. The credit applies to 50% of qualified administrative and retirement-education expenses for each of the first three plan years. However, the maximum credit is $500 per year.

Credit for Employee Health Insurance Expenses of Small Employers: Eligible small employers are allowed a credit for certain expenditures to provide health insurance coverage for their employees. Generally, employers with 10 or fewer full-time equivalent employees (FTEs) and an average annual per-employee wage of $25,800 or less are eligible for the full credit. In 2015, the credit amount begins to phase out for employers with either 11 FTEs or an average annual per-employee wage of more than $25,800. The credit is phased out completely in 2015 for employers with 25 or more FTEs or an average annual per-employee wage of $51,600 or more. For 2015, the credit is available on a sliding scale for up to 50% of the employer's contribution toward employee health insurance premiums, is only allowable if the health insurance is purchased through a Small Business Health Options (SHOP) Exchange, and is only available for two consecutive taxable years.

Employer-Provided Child Care Credit: For 2015, employers may claim a credit of up to $150,000 for supporting employee child care or child care resource and referral services. The credit is allowed for a percentage of “qualified child care expenditures,” including for property to be used as part of a qualified child care facility, for operating costs of a qualified child care facility, and for resource and referral expenditures.

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