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IRS-HHS urge employers to use tax credit for health coverage

Washington—As filing extension deadlines approach, the IRS urged health care tax credit-eligible employers of 25 or fewer employees, “Don’t leave money on the table.”

In joint announcements Sept. 7, the Internal Revenue Service and Department of Health and Human Services reminded employers, tax-exempt organizations and their tax advisers of potential eligibility for the small business health care tax credit enacted with the 2010 health reform law.

Small employers who pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for the credit, which is targeted to businesses and organizations that primarily employ 25 or fewer employees with average income of $50,000 or less.

Small business employers face these tax filing deadlines:

  • September 15—Calendar-year filing corporations that requested an extension to 9/15 can calculate the small employer health care tax credit on Form 8941 and claim it as part of the general business credit on Form 3800, which they would include with their corporate income tax return;
  • October 17—Sole proprietors who file Form 1040 and partners and S-corporation shareholders who report their income on Form 1040, and requested an extension, have until 10/17 to complete their returns; they would use Form 8941 to calculate the small employer health care tax credit and claim it as a general business credit on Form 3800, reflected on Form 1040 line 53.

“As the filing deadlines approach, we want to make sure that small business owners don’t leave money on the table,” said IRS Commissioner Doug Shulman. “Small businesses that offer health insurance should learn about this credit and claim it if they are eligible.”

The joint announcements also say:

  • Businesses that have already filed can still claim the credit;
  • Businesses without tax liability this year can benefit, and
  • Businesses that couldn’t use the credit in 2010 can claim it in future years.

Information on eligibility requirements and credit calculations is posted at Small Business Health Care Tax Credit for Small Employers. HHS posted additional information at http://www.healthcare.gov/news/blog/smallbusiness09072011.html.