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Turbotax Free State File

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Turbotax Free State File

Turbotax free state file 9. Turbotax free state file   Worksheets Table of Contents When Should I Figure MAC?Checking the Previous Year's Contributions Available Worksheets Chapter 2 introduced you to the term maximum amount contributable (MAC). Turbotax free state file Generally, your MAC is the lesser of your: Limit on annual additions (chapter 3), or Limit on elective deferrals (chapter 4). Turbotax free state file The worksheets in this chapter can help you figure the cost of incidental life insurance, your includible compensation, your limit on annual additions, your limit on elective deferrals, your limit on catch-up contributions, and your MAC. Turbotax free state file After completing the worksheets, you should maintain them with your 403(b) records for that year. Turbotax free state file Do not attach them to your tax return. Turbotax free state file At the end of the year or the beginning of the next year, you should compare your estimated compensation figures with your actual figures. Turbotax free state file If your compensation is the same as, or more than, the projected amounts and the calculations are correct, then you should simply file these worksheets with your other tax records for the year. Turbotax free state file If your compensation was lower than your estimated figures, you will need to check the amount contributed during the year to determine if contributions are more than your MAC. Turbotax free state file When Should I Figure MAC? At the beginning of each year, you should figure your MAC using a conservative estimate of your compensation. Turbotax free state file Should your income change during the year, you should refigure your MAC based on a revised conservative estimate. Turbotax free state file By doing this, you will be able to determine if contributions to your 403(b) account should be increased or decreased for the year. Turbotax free state file Checking the Previous Year's Contributions At the beginning of the following year, you should refigure your MAC based on your actual earned income. Turbotax free state file At the end of the current year or the beginning of the next year, you should check your contributions to be sure you did not exceed your MAC. Turbotax free state file This means refiguring your limit based on your actual compensation figures for the year. Turbotax free state file This will allow you to determine if the amount contributed is more than the allowable amounts, and possibly avoid additional taxes. Turbotax free state file Available Worksheets The following worksheets have been provided to help you figure your MAC. Turbotax free state file Worksheet A. Turbotax free state file Cost of Incidental Life Insurance. Turbotax free state file Worksheet B. Turbotax free state file Includible Compensation for Your Most Recent Year of Service Worksheet C. Turbotax free state file Limit on Catch-Up Contributions. Turbotax free state file ??? Worksheet 1. Turbotax free state file Maximum Amount Contributable (MAC). Turbotax free state file Worksheet A. Turbotax free state file Cost of Incidental Life Insurance Note. Turbotax free state file Use this worksheet to figure the cost of incidental life insurance included in your annuity contract. Turbotax free state file This amount will be used to figure includible compensation for your most recent year of service. Turbotax free state file 1. Turbotax free state file Enter the value of the contract (amount payable upon your death) 1. Turbotax free state file   2. Turbotax free state file Enter the cash value in the contract at the end of the year 2. Turbotax free state file   3. Turbotax free state file Subtract line 2 from line 1. Turbotax free state file This is the value of your current life insurance protection 3. Turbotax free state file   4. Turbotax free state file Enter your age on your birthday nearest the beginning of the policy year 4. Turbotax free state file   5. Turbotax free state file Enter the 1-year term premium for $1,000 of life insurance based on your age. Turbotax free state file (From Figure 3-1) 5. Turbotax free state file   6. Turbotax free state file Divide line 3 by $1,000 6. Turbotax free state file   7. Turbotax free state file Multiply line 6 by line 5. Turbotax free state file This is the cost of your incidental life insurance 7. Turbotax free state file   Worksheet B. Turbotax free state file Includible Compensation for Your Most Recent Year of Service1 Note. Turbotax free state file Use this worksheet to figure includible compensation for your most recent year of service. Turbotax free state file 1. Turbotax free state file Enter your includible wages from the employer maintaining your 403(b) account for your most recent year of service 1. Turbotax free state file   2. Turbotax free state file Enter elective deferrals excluded from your gross income for your most recent year of service2 2. Turbotax free state file   3. Turbotax free state file Enter amounts contributed or deferred by your employer under a cafeteria plan for your most recent year of service 3. Turbotax free state file   4. Turbotax free state file Enter amounts contributed or deferred by your employer according to your election to your 457 account (a nonqualified plan of a state or local government or of a tax-exempt organization) for your most recent year of service 4. Turbotax free state file   5. Turbotax free state file Enter pre-tax contributions (employer's contributions made on your behalf according to your election) to a qualified transportation fringe benefit plan for your most recent year of service 5. Turbotax free state file   6. Turbotax free state file Enter your foreign earned income exclusion for your most recent year of service 6. Turbotax free state file   7. Turbotax free state file Add lines 1, 2, 3, 4, 5, and 6 7. Turbotax free state file   8. Turbotax free state file Enter the cost of incidental life insurance that is part of your annuity contract for your most recent year of service 8. Turbotax free state file   9. Turbotax free state file Enter compensation that was both: Earned during your most recent year of service, and Earned while your employer was not qualified to maintain a 403(b) plan 9. Turbotax free state file   10. Turbotax free state file Add lines 8 and 9 10. Turbotax free state file   11. Turbotax free state file Subtract line 10 from line 7. Turbotax free state file This is your includible compensation for your most recent year of service 11. Turbotax free state file   1Use estimated amounts if figuring includible compensation before the end of the year. Turbotax free state file  2Elective deferrals made to a designated Roth account are not excluded from your gross income and should not be included on this line. Turbotax free state file Worksheet C. Turbotax free state file Limit on Catch-Up Contributions Note. Turbotax free state file If you will be age 50 or older by the end of the year, use this worksheet to figure your limit on catch-up contributions. Turbotax free state file 1. Turbotax free state file Maximum catch-up contributions 1. Turbotax free state file $5,500 2. Turbotax free state file Enter your includible compensation for your most recent year of service 2. Turbotax free state file   3. Turbotax free state file Enter your elective deferrals 3. Turbotax free state file   4. Turbotax free state file Subtract line 3 from line 2 4. Turbotax free state file   5. Turbotax free state file Enter the lesser of line 1 or line 4. Turbotax free state file This is your limit on catch-up contributions 5. Turbotax free state file   Worksheet 1. Turbotax free state file Maximum Amount Contributable (MAC) Note. Turbotax free state file Use this worksheet to figure your MAC. Turbotax free state file Part I. Turbotax free state file Limit on Annual Additions     1. Turbotax free state file Enter your includible compensation for your most recent year of service 1. Turbotax free state file   2. Turbotax free state file Maximum1: For 2013, enter $51,000 For 2014, enter $52,000 2. Turbotax free state file   3. Turbotax free state file Enter the lesser of line 1 or line 2. Turbotax free state file This is your limit on annual additions 3. Turbotax free state file     Caution: If you had only nonelective contributions, skip Part II and enter the amount from line 3 on line 18. Turbotax free state file     Part II. Turbotax free state file Limit on Elective Deferrals     4. Turbotax free state file Maximum contribution: For 2013, enter $17,500 For 2014, enter $17,500 4. Turbotax free state file     Note. Turbotax free state file If you have at least 15 years of service with a qualifying organization, complete lines 5 through 17. Turbotax free state file If not, enter zero (-0-) on line 16 and go to line 17. Turbotax free state file     5. Turbotax free state file Amount per year of service 5. Turbotax free state file $ 5,000 6. Turbotax free state file Enter your years of service 6. Turbotax free state file   7. Turbotax free state file Multiply line 5 by line 6 7. Turbotax free state file   8. Turbotax free state file Enter the total of all elective deferrals made for you by the qualifying organization for prior years 8. Turbotax free state file   9. Turbotax free state file Subtract line 8 from line 7. Turbotax free state file If zero or less, enter zero (-0-) 9. Turbotax free state file   10. Turbotax free state file Maximum increase in limit for long service 10. Turbotax free state file $15,000 11. Turbotax free state file Enter the total of additional pre-tax elective deferrals made in prior years under the 15-year rule 11. Turbotax free state file   12. Turbotax free state file Enter the aggregate amount of all designated Roth contributions permitted for prior years under the 15-year rule 12. Turbotax free state file   13. Turbotax free state file Add line 11 and line 12 13. Turbotax free state file   14. Turbotax free state file Subtract line 13 from line 10 14. Turbotax free state file   15. Turbotax free state file Maximum additional contributions 15. Turbotax free state file $ 3,000 16. Turbotax free state file Enter the least of lines 9, 14, or 15. Turbotax free state file This is your increase in the limit for long service 16. Turbotax free state file   17. Turbotax free state file Add lines 4 and 16. Turbotax free state file This is your limit on elective deferrals 17. Turbotax free state file     Part III. Turbotax free state file Maximum Amount Contributable     18. Turbotax free state file If you had only nonelective contributions, enter the amount from line 3. Turbotax free state file This is your MAC. Turbotax free state file    If you had only elective deferrals, enter the lesser of lines 3 or 17. Turbotax free state file This is your MAC. Turbotax free state file    If you had both elective deferrals and nonelective contributions, enter the amount from line 3. Turbotax free state file This is your MAC. Turbotax free state file (Use the amount on line 17 to determine if you have excess elective deferrals as explained in chapter 7. Turbotax free state file ) 18. Turbotax free state file   1If you participate in a 403(b) plan and a qualified plan, you must combine contributions made to your 403(b) account with contributions to a qualified plan and simplified employee pension plans of all corporations, partnerships, and sole proprietorships in which you have more than 50% control. Turbotax free state file You must also combine the contributions made to all 403(b) accounts on your behalf by your employer. Turbotax free state file Prev  Up  Next   Home   More Online Publications
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Small Business Health Care Tax Credit for Small Employers

 

 

Small employer? Get the credit you deserve.

     If you are a small employer. . .

              with fewer than 25 full-time equivalent employees,
              pay an average wage of less than $50,000 a year, and
               pay at least half of employee health insurance premiums

 

                               . . .then there is a tax credit that may put money in your pocket.

 

 

What You Need to Know about the Small Business Health Care Tax Credit

How will the credit make a difference for you?                 

For tax years 2010 through 2013, the maximum credit is 35 percent of premiums paid for small business employers and 25 percent of premiums paid for small tax-exempt employers such as charities.

 

For tax years beginning in 2014 or later, there will be changes to the credit:

 

  • The maximum credit will increase to 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers. 
  • To be eligible for the credit, a small employer must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace.
  • The credit will be available to eligible employers for two consecutive taxable years.

 

Here’s what this means for you. If you pay $50,000 a year toward workers’ health care premiums — and if you qualify for a 15 percent credit, you save... $7,500. If you save $7,500 a year from tax year 2010 through 2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20 percent, your savings go from $7,500 a year to $10,000 a year.

 

Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments is more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

 

There is good news for small tax-exempt employers too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability.

 

And finally, if you can benefit from the credit this year but forgot to claim it on your tax return, there’s still time to file an amended return.

 

Click here if you want more examples of how the credit applies in different circumstances.

Can you claim the credit?

Now that you know how the credit can make a difference for your business, let’s determine if you can claim it.

To be eligible, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees (FTEs). Those employees must have average wages of less than $50,000 (as adjusted for inflation beginning in 2014) per year. Remember, you will have to purchase insurance through the SHOP Marketplace to be eligible for the credit for tax years 2014 and beyond.

Let us break it down for you even more.

You are probably wondering: what IS an FTE. Basically, two half-time workers count as one FTE. That means 20 half-time employees are equivalent to 10 FTEs, which makes the number of FTEs 10, not 20.

Now let’s talk about average annual wages. Say you pay total wages of $200,000 and have 10 FTEs. To figure average annual wages you divide $200,000 by 10 — the number of FTEs — and the result is your average annual wage. The average annual wage would be $20,000.

Also, the amount of the credit you receive works on a sliding scale. The smaller the business or charity, the bigger the credit. So if you have more than 10 FTEs or if the average wage is more than $25,000 (as adjusted for inflation beginning in 2014), the amount of the credit you receive will be less.

How do you claim the credit?

You must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For detailed information on filling out this form, see the Instructions for Form 8941.

 

If you are a small business, include the amount as part of the general business credit on your income tax return.

 

If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if you don't ordinarily do so.
 

Don’t forget... if you are a small business employer, you may be able to carry the credit back or forward. And if you are a tax-exempt employer, you may be eligible for a refundable credit.

 

          

Versión en Español

Información acerca del Crédito Tributario por Cuidados de Salud para Pequeñas Empresas

Questions and Answers

Got questions? We have answers.

Small Business Health Care Tax Credit Estimator

Use the estimator to find out whether you may be eligible and get an estimate of how much you might receive.

Forms and Step-by-Step Instructions

Form 8941, Credit for Small Employer Health Insurance Premiums and Instructions for Form 8941

Additional Guidance

Additional guidance on the credit is available in Notices 2010-44, 2010-82 and Notice 2014-6. Find guidance for the 2014 changes in REG-113792-13

News Releases

Affordable Care Act News Releases, Multimedia and Legal Guidance

Widgets

IRS small business health care tax credit Widgets available on Marketing Express.

Information Flyer

Flyer on the Small Business Health Care Tax Credit for small employers.

 

 

 

 

 

 

 

Page Last Reviewed or Updated: 07-Feb-2014

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