As you know, the Affordable Care Act allows certain employers
to be eligible for a tax credit. Specifically, the credit is geared
toward employers with 25 or fewer employees with average
income of $50,000 or less. Small employers face two important
deadlines in the coming weeks:
• September 15 – Corporations that file on a calendar year
basis and requested an extension to file to September
15 can calculate the small employer health care 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 have until October 17 to complete
their returns. They would also use Form 8941 to
calculate the small employer health care credit and claim
it as a general business credit on Form 3800, reflected on
line 53 of Form 1040.
In addition, tax –exempt organizations that file on a calendar
year basis and requested an extension to file to November 15
can use Form 8941 and then claim the credit on Form 990-T,
Line 44f.
The Department of Health and Human Services (HHS),
along with the IRS, will be targeting small businesses and tax
preparers through a new outreach campaign that includes
YouTube videos, emails and tweets to remind employers about
the upcoming extension deadlines and provide details on other
important information about the credit including:
• Business who have already filed can still claim the
credit.
o For small businesses that have already filed and later
determine they are eligible for the credit, they can
always file an amended 2010 tax return. Corporations
use Form 1120X and individual sole proprietors use
Form 1040X.
• Businesses without tax liability this year can still
benefit.
o The Small Business Jobs Act of 2010 provided that
for Tax Year 2010, eligible small businesses may carry
back unused general business credits (including
the small employer health care tax credit) five years.
Previously these credits could only be carried back one
year. Small businesses that did not have tax liability to
offset in 2010 should still evaluate eligibility for the small
business health care tax credit in light of this expanded
carry back opportunity.
• Businesses that couldn’t use the credit in 2010 can
claim it in future years.
o Some businesses that already locked into health
insurance plan structures and contributions for 2010
may not have had the opportunity to make any needed
adjustments to qualify for the credit for 2010. These
businesses may be eligible to claim the credit on 2011
returns or in years beyond. Small employers can claim
the credit for 2010 through 2013 and for two additional
years beginning in 2014.
Additional information about eligibility requirements and
calculating the credit can be found on the Small Business
Health Care Tax Credit for Small Employers page of IRS.gov.