IRS Releases Draft Form 8941 for Small Business Health Care Tax Credit

The Internal Revenue Service (IRS) released a draft version of Form 8941 on Sept. 7. The form is available for small businesses and tax-exempt organizations to use in calculating the small business health care tax credit when filing next year’s tax returns. Small businesses can claim the tax credit as part of the general business credit on their income tax returns. 

According to the release, the tax credit is generally available to small businesses that “contribute an amount equivalent to at least half the cost of single coverage toward buying health insurance for their employees.” Enacted as part of this health care reform passed earlier this year, the credit is intended to encourage smaller employers with low- to moderate-income employees to continue offering health insurance, or to offer it for the first time. 

For 2011 through 2013, the maximum credit is only available to employers with 10 or fewer full-time equivalent employees with an average income of $25,000 or less will be 35 percent of premiums paid. Larger companies with higher wages would be eligible to gradually lesser credit amounts until the credit is phased out completely for businesses with 25 or more employees and average wages of $50,000 or more annually.