The IRS released a draft Form 8941 for small business and tax-exempt organizations to use while calculating the small business health care tax credit when filing income tax returns next year.
The small business health care tax credit was included in PPACA and is effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees. The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ moderate- and lower-income workers.
While both small businesses and tax-exempt organizations will use the Form 8941 to calculate the credit, a small business will then include the amount of the credit as part of the general business credit on its income tax return. Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T.
The Form 990-T is currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.
The final version of Form 8941 and instructions will be available later this year.
To view the form, click here.
For more information on the tax credit, click here.
