December 2010
New Health Insurance Tax Credit for Nanny Employers
The IRS recently published the details of the new Health Insurance Tax Credit for Small Employers, which includes households.
If an employer contributes to their employee's health insurance, they will receive up to a 35% tax credit on those contributions. So, in addition to health insurance being non-taxable to families and nannies, it now comes with added savings for families. This tax credit will take effect starting with the 2010 tax year, so this year's contributions will be applicable on your tax year 2010 Tax Return.
Example: The Smiths paid their nanny $25,000 during 2010 and also contributed $300 per month ($3,600 total) toward her health insurance. The Smiths' 2010 tax credit will be $1,260 ($3,600 x 35%).
Qualification details:
- The employer must pay at least 50% of the premium cost;
- The average annual wages paid by the employer (to all employees on staff) must be $50,000 or less.