D) 50 percent

A) 10 percent

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B) 25 percent

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C) 35 percent

Correct.

For tax years beginning in 2010 through 2013, the maximum credit is 35 percent of the employer's premium expenses. The maximum credit for a tax-exempt qualified employer is 25 percent.

In order to qualify for the credit, employers must:

• Have fewer than 25 full-time equivalent employees for the tax year;
• The average annual wages of its employees for the year must be less than $50,000; and
• The employer must pay the premiums under a "qualifying arrangement"

Under a qualifying arrangement, the employer pays 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 percent) of the premium cost of the coverage. However, a qualifying arrangement also includes an arrangement under which the employer pays at least 50 percent of the premium cost for single (employee-only) coverage for each employee enrolled in any health insurance coverage offered by the employer. Also, if the employer provides employees with more than one type of health insurance coverage or if the employer's health insurance provider does not charge the same premium for all employees enrolled in single (employee-only) coverage, the employer may meet the qualifying arrangement requirement even though the employer paid less than 50 percent of the premium cost for some employees enrolled in single (employee-only) coverage.

[See also: Filing deadlines approach for small biz tax credit]

For more information about the small business health care tax credit, click here.

D) 50 percent

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