IRS answers Small Business Tax Credit questions

The Internal Revenue Service released answers to FAQ’s surrounding the Small Business Tax Credit.  The general gist of it is below, but click here for the full article.

1)  Owners and their families are not counted  as employees, nor are their hours taken into account.

2)   “The following individuals are not considered employees for purposes of the credit: owners of the small business, such as sole proprietors, partners, shareholders owning more than 2% of an S corporation or more than 5% of a C corporation; spouses of these owners; and family members of these owners, which include a child, grandchild, sibling or step-sibling, parent or ancestor of a parent, a step-parent, niece or nephew, aunt or uncle, son-in-law or daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in-law. A spouse of any of these family members should also not be counted as an employee.”

3)  Part time workers and leased employees count in the Full Time Equivalent calculations but seasonal workers and ministers in a church don’t.

4) There are three ways to calculate FTE’s:  Actual hours worked, Days worked equivalency, or Weeks-worked equivalency.