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.