How are average annual wages determined?
Average annual wages are determined by dividing the total wages paid by the employer to employees during the employer’s tax year by the number of the employer’s FTEs for the year. The result is then rounded down to the nearest $1,000. For this purpose, wages means wages as defined for FICA purposes (without regard to the wage base limitation). Example: For the 2010 tax year, an employer pays $224,000 in wages and has 10 FTEs. The employer’s average annual wages would be $22,000 ($224,000 รท 10 = $22,400, rounded down to the nearest $1,000). What is a qualifying arrangement? Only premiums paid by the employer under a “qualifying arrangement” are counted in calculating the credit. Under a qualifying arrangement, the employer pays premiums for each employee enrolled in health care coverage in an amount equal to a uniform percentage (not less than 50%) of the premium cost of the coverage. If the employer pays only a portion of the premiums for the coverage provided to employees (with employ
