Q. Which employers are eligible for the small employer health care tax credit?
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Small employers that provide health care coverage to their employees and that meet certain requirements (?qualified employers?) generally are eligible for a federal income tax credit for health insurance premiums they pay for certain employees. In order to be a qualified employer, (1) the employer must have fewer than 25 full-time equivalent employees (?FTEs?) for the tax year, (2) the average annual wages of its employees for the year must be less than $50,000 per FTE, and (3) the employer must pay the premiums under a ?qualifying arrangement? described in Q/A-3. See Q/A-10 through 16 for further information on calculating FTEs and average annual wages and see Q/A-24 for information on transition relief for tax years beginning in 2010 with respect to the requirements for a qualifying arrangement.
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