IRS Announces how Exempt Organizations can Claim New Health Care Tax Credit

Posted on September 7, 2010 by A. Nicole Spooner

In our April 7, 2010 blog entry on the health care tax credit, we explained that the credit was designed to encourage small employers, including exempt organizations, to offer health insurance coverage for the first time or maintain the coverage they already have.  The IRS today has released a draft version of the form that small businesses and exempt organizations will use to calculate the small business health care tax credit when they file income tax returns next year.  The IRS also announced how eligible exempt organizations –– which do not generally file income tax returns –– will claim the credit during the 2011 filing season.

Both small businesses and tax-exempt organizations will use the form to calculate the credit.  Instead of claiming the credit on an income tax return, however, 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 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 exempt organizations to also claim the small business health care tax credit.  These organizations will not have to owe unrelated business income tax to be able to file a Form 990-T and claim the tax credit.

The draft Form 8941 is available on the IRS website.  The IRS states that the final Form will be available later this year.

For additional information on the health care tax credit, please visit the IRS page on this topic or review our April 7, 2010 blog entry.
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Health Care Tax Credit is Now Available for Some Tax-Exempt Organizations

Posted on April 7, 2010 by A. Nicole Spooner

Under the recently enacted health care reform legislation, many small businesses and tax-exempt organizations are now eligible for a new federal tax credit.  This credit is designed to encourage small employers to offer health insurance for the first time or maintain coverage they already have.

The IRS said that the credit is generally available to small employers that pay at least half the cost of single coverage for their employees.  The maximum credit is 35 percent of the premiums paid in 2010 by eligible small employers and 25 percent of the premiums paid by eligible tax-exempt organizations.  In 2014, these maximum credits will increase to 50 percent for eligible small employers and 35 percent for eligible tax-exempt organizations.

Eligible small businesses can claim the credit as part of the general business credit starting with their 2010 income tax return.  For tax-exempt employers, however, the IRS will provide further information on how to claim the credit.

For additional information, please visit the IRS page on this topic.
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