Tax Credit

  
 

About
Requirements
Application Process
Tax Claim Details

All available slots for the tax credit section have been filled for the 2007 tax year. Your business may be eligible for a tax credit with the Department of Revenue under Section 15-31-132 of the Montana Code Annotated 2005.  Contact your accountant or the Department of Revenue for more information.

About Insure Montana Refundable Tax Credits  

If you are a small business that has purchased group health insurance in the existing marketplace, you may be having a tough time holding on to your plan as health care costs continue to rise.  Refundable tax credits are also available through Insure Montana for small businesses that are currently signed up for existing coverage.

Insure Montana is a joint initiative of Governor Brian Schweitzer and State Auditor John Morrison that is administered by the State Auditor’s Office.  This is two part program that is designed to assist small businesses with the cost of health insurance, whether they have provided health insurance previously, or not.

Small businesses with 2-9 employees that are currently providing health insurance to their employees are eligible for refundable tax credits.

This initiative began in 2005 and already many businesses have applied for membership. An eligibility list has been formed to enroll businesses on a first-come, first-served basis.

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Description:

Insure Montana provides a refundable state income tax credit to employers who currently pay some or all of the cost of group health insurance for their employees.  The program also provides additional Tax Credits when employers pay for insurance for the employee’s spouse or their dependants. Approximately 40% of the available funding per year is designated to the Employer Tax Credit. 

Employer/Employee Eligibility Requirements:

In order to qualify for an Employer Tax Credit the employer must meet all the following criteria:

  1. The employer already provides employee group health insurance paid to a licensed health insurer.  Employers who belong to a Multi Employer Welfare Arrangement (MEWA) are not eligible (i.e. Associated Employers Group Benefit Plan & Trust.)
  2. The employer has a number of employees that meets the eligibility criteria established by the State Auditor’s Office (between 2–9 employees);
  3. The tax credit cannot be more than 50% of premiums paid;
  4. No employee is paid more than $75,000 per year (owner excluded).
  5. The employer cannot pay premiums from a medical savings account.

Tax Credit Amounts: The following are the tax credits that may be claimed under Insure Montana for each eligible employee, spouse and dependants: 

  Tax Credit Amounts

Employee

Employee's

Employee's

 

Only

Spouse

Dependants

Employer Tax Credit:

$100/month

$100/month

$40/month

If the average age of employees is 45 or older, the tax credit for an employee increases to $125.00.

Employers deemed eligible for a tax credit after July 1st will receive a tax credit for July to December of that year.

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Claiming the Tax Credit

The amount stated on your certificate is the amount you may claim for your refundable tax credit on your annual income tax return.  If your business operations as a C. corporation, you will claim the credit on the entity’s Montana Corporation License Tax return (Form CLT-4). If your business operates as a Partnership or S. corporation, you will report the credit on your Montana Partnership Return (Form PR-1) or Montana S. Corporation Return (Form CLT-4S).  Partners or shareholders of these entities will then report their respective share of the credit on their individual income tax return or the Form CLT-4 depending on whether they are an individual or C. corporation. If your business operates as a sole proprietorship, you will claim the credit on your individual income tax return. When you claim the credit, you are not allowed a deduction for the insurance premiums that you used to generate this credit.  This amount will usually be 200% of the credit claimed.  The instructions for your tax return provide more information. 

Please speak with your accountant or the Montana Department of Revenue customer service center at 406-444-6900 to answer any questions.

Insure Montana (Tax Credit) Application Process

  1. Employers apply with Insure Montana for eligibility determination and placement on list.  Employers will then receive letter confirming eligibility and their “rank” on the list.
  2. Information will follow from Insure Montana staff to enrolled employers specifying the amount of tax credit that may be claimed, as well as instructions on how to claim the credits. 

Click here to apply.

Click here to email questions to Insure Montana staff.

 

Funding is provided by a $1.00 increase to the price of cigarettes, passed in 2004 by Montana voters. Number of applicants admitted to the program, is dependent upon cigarette sales. Funding and sustainability of the Small Business Health Insurance Pool is determined on an annual basis.

 

Claiming the Tax Credit


The amount stated on your certificate is the amount you may claim for your refundable tax credit on your annual income tax return.  If your business operations as a C. corporation, you will claim the credit on the entity’s Montana Corporation License Tax return (Form CLT-4). If your business operates as a Partnership or S. corporation, you will report the credit on your Montana Partnership Return (Form PR-1) or Montana S. Corporation Return (Form CLT-4S).  Partners or shareholders of these entities will then report their respective share of the credit on their individual income tax return or the Form CLT-4 depending on whether they are an individual or C. corporation. If your business operates as a sole proprietorship, you will claim the credit on your individual income tax return.

Please speak with your accountant or the Montana Department of Revenue customer service center at 406-444-6900 to answer any questions.

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