Vision Payroll

July 5, 2010

Impact of the Small Business Health Care Tax Credit on Employment Tax Payments

The new health reform law gives a tax credit to certain small employers that provide health care coverage to their employees, effective with tax years beginning in 2010. Over several weeks, Vision Payroll will be providing further information on the Small Business Health Care Tax Credit. Today’s topic is Impact of the Small Business Health Care Tax Credit on Employment Tax Payments.

Employers may not reduce the amount of employment tax payments paid and use the Small Business Health Care Tax Credit to offset the taxes not paid. Federal employment taxes include both those imposed on the employer and those imposed on the employee. They include federal unemployment tax, the employer portion of Old-Age Survivors and Disability Insurance (OASDI) tax, also known as social security and Medicare, federal income tax withheld, social security tax withheld, and Medicare tax withheld. The Small Business Health Care Tax Credit may only offset income tax.

The next topic to be covered in this series is Transition Relief for Employers That Do Not Pay a Uniform Percentage. Contact Vision Payroll if you have further questions on Impact of the Small Business Health Care Tax Credit on Employment Tax Payments.

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