Compliance Blog

Written by Carrie Hunt, General Counsel and VP of Regulatory Affairs

Normally when I see the word “tax” I try not to read any further, but I wanted to take a moment and make sure credit unions have investigated whether  they may be eligible for a small business heath care tax credit.  Credit unions can verify their eligibility on the IRS website.  The website details the following:

In general businesses are eligible for the credit if they meet the provisions below:

• Providing health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
• Firm size. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
• Average annual wage. A qualifying employer must pay average annual wages below $50,000.

 The amount of credit a business can receive:

• Maximum Amount. The credit is worth up to 35 percent of a small business' premium costs in 2010 (25% for tax-exempt employers). On January 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers). 
• Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

Word of warning:

For the past two years some credit unions have appeared on an IRS list of tax-exempt institutions that had lost their tax exemption.  The credit unions could have appeared on that list for a number of reasons, but most of the issues were related to poor recordkeeping or administrative mistakes.  In order to claim the heath care tax credit, credit unions will have to file a form 990-T.  Since federal credit unions do not have to file a form 990 under normal circumstances, apparently there was a problem last year with federal credit unions filing the form and getting inadvertently put on a list of institutions who had lost their exemption since the IRS did not have the credit unions “on file” for having filed a 990 in any other year.  This problem is supposed to have been rectified for the 2011 filing year, by the addition of a new line item to the 990-T, but please take this into account if you decide to file for the tax credit.

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Finally, I will close with a solution to a little conundrum that has been bothering me for years:  what to do with leftover Chinese food takeout rice.  I did not invent this recipe but will gladly take responsibility for foisting it on the credit union community.  Take 1 ½ cups rice, one egg and smash it all together with a generous pinch or two of salt.  Heat up a few tablespoons of butter over medium high heat, drop decent sized spoonfuls of the rice stuff into the butter and flatten down a bit to make pancakes.  Cook 3-4 minutes a side until golden.  Easy and good.  And cheap.  Three of my favorite qualities.