What time period is used to calculate wages?

The taxable year.

What if employees work only a few months?

Seasonal workers who work fewer than 120 days during the tax year are not considered employees in determining FTEs and average annual wages.  However, premiums paid on their behalf are counted in determining the amount of the credit.

How will the small business tax credit work?

1. Determining Eligibility:  See http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf
   Note:  Beginning in 2014, eligible small businesses can secure the tax credit only if they purchase coverage for their employees through SHOP.
2. Calculating the Credit:  The maximum tax credit is 50% (beginning in 2014) of the eligible small employer’s premium payments made on behalf of its employees.  For tax-exempt eligible small employers, the maximum tax credit is 35% (beginning in 2014).  Employers with 10 or fewer full-time equivalents (FTEs) with average wages of $25,000 or less are eligible for the maximum tax credit.  The tax credit is subject to a reduction if the employer’s FTEs exceed 10 or average annual FTE wages exceed $25,000.  Tax credits are available for a total of two consecutive years.
   Note:  The tax credits are subject to adjustments and limitations.  Please consult with a tax/financial adviser.

How is the tax credit applied to owner employees?

For purposes of the small business tax credit, the following are excluded from the definition of employee:

1. The owner of a sole proprietorship
2. A 5% or more partner in a partnership
3. A 5% or more shareholder of a C-corporation
4. A 2% or more shareowner of an S-corporation
5. Any dependent of the above
6. Any family member of the above