A study of filing data for the small business health insurance tax credit finds that the tax credit amounts are often miscalculated.

Tax Credits LLC, which provides an online Small Business Tax Credit Calculator, contends that other tax credit estimator tools and accounting software are providing the incorrect information to accountants and small businesses that are trying to gauge their qualification and claim the tax credits.

“Accountants and tax preparers must calculate, not estimate, the projected small business health care tax credit refund before dismissing a filer’s qualification for a substantial refund,” said Tax Credits LLC president Tim Morrison, who developed the calculator. “Our case study data clearly documents small business scenarios across the country in which the estimator tools completely negated and/or far underestimated a business’s entitled refund.”

His company's study found that other estimator tools and accounting software tax credit calculators showed a $0 tax credit when the correct tax credit was actually $12,087; calculations of $5,360 when the correct credit was $9,896; and credits of $10,842 when the correct credit due the small business was actually $20,041.

“A stellar example of why the calculations must be done came from an accountant in South Dakota," said Morrison. "His client had 72 employees entered in the calculation with only four covered for health insurance, producing a $4,909 tax credit for this employer. Had the accountant not gone through the calculations in our system, he would not have realized a tax credit for his client. On the surface it appears that the maximum full-time equivalent employee count to qualify for the credit is 25. The fact that our tool uses all permitted IRS variables enabled this company with 72 employees to get a tax credit for almost $5,000.”

To encourage tax preparers to calculate their client’s health care tax credit and ensure that as many small businesses as possible benefit from the accountant's expertise, Tax Credits LLC is offering a $100 discount from now until March 25, 2011 on the use of its multi-user calculator options at www.smallbusinesstaxcreditcalculator.com.

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