1. S PONSORED BY : G UIDE S TONE F INANCIAL R ESOURCES Danny Miller Conner & Winters, LLP 1627 I Street NW, Suite 900 Washington, D.C. 20006 T HE S MALL B USINESS H EALTHCARE T AX C REDIT M ARCH 8, 2011

2. S MALL E MPLOYER T AX C REDIT Qualified small employers may be eligible for a tax credit for their contributions to purchase health insurance for employees. Tax credit also available to self-insured denominational health care plans. Tax credit available beginning in 2010.

3. Q UALIFIED E MPLOYER “Qualified employer” – The employer must have < 25 full-time equivalent employees (FTEEs) for the tax year; The average annual wages of its employees for the year must be < $50,000 per FTEE; and The employer must maintain a “qualifying arrangement.”

4. E LIGIBILITY FOR T AX C REDIT “Qualifying Arrangement”: Employer must pay premiums for each employee enrolled in health care coverage offered by the employer in an amount equal to a uniform percentage (not less than 50%) of the premium cost of employee-only coverage. Special transition relief available for 2010 only – employer “deemed” to satisfy uniformity requirement if it pays at least 50% for each covered employee.

5. E LIGIBILITY FOR T AX C REDIT Counting Average Wages – Add up total FICA wages for all employees Pastors’ wages are not counted because pastors do not receive FICA wages. Divide total FICA wages by number of FTEEs. Note: Although pastor’s wages are not counted in determining average wages, the pastor is included in number of FTEEs. If result is not a multiple of 1,000, round down to nearest 1,000.

6. A MOUNT OF T AX C REDIT The maximum credit for 2010-2013 is 25% of lesser of: –Actual cost; –Maximum costs (based on average premium for small group market in the state) – See IRS Form 8941 for list of state average premiums for small market. The credit increases to 35% for 2014-2016, but only for coverage purchased from an exchange. Credit phases out for employers paying average wages to employees between $25,000 and $50,000 and for employers with between 10 and 25 FTEEs.

7. A PPLYING FOR T AX C REDIT For tax-exempt employers, this is refundable credit applied to following payroll tax obligations: –Federal income tax withholding. –Employer and employee portions of Medicare taxes. –What if pastor is the only employee? Use Form 8941 to calculate tax credit; claim credit on Line 44f of Form 990-T. To claim tax credit for 2010, must file by 5/15/2011.

8. Average wage Firm size Up to $25,000$30,000$35,000$40,000$45,000$50,000 ≤ 1025%20%15%10%5%0% 1123%18%13%8%3%0% 1222%17%12%7%2%0% 1320%15%10%5%0% 1418%13%8%3%0% 1517%12%7%2%0% 1615%10%5%0% 1713%8%3%0% 1812%7%2%0% 1910%5%0% 208%3%0% 217%2%0% 225%0% 233%0% 242%0% 250% Small Business Tax Credit, Nonprofit Firms in 2010-2013