Oct 26, 2010

IRS Releases Draft Form for New Health Care Credit

The IRS released a draft of the form to be used for the new small business health care credit which is available starting in 2011. Small businesses will use the new Form 8941 to calculate the amount of the credit they are entitled to take. They will then include that amount as part of the general business credit they claim on their income tax return.

The health care credit was part of the Affordable Care Act passed in March. It is generally available to small employers that contribute an amount equal to at least half the cost of single coverage for health insurance for their employees. It is aimed at helping small businesses that employ moderate- and lower-income workers. For tax years 2010 to 2013, the maximum credit is 35 percent of premiums paid by the employer; it will increase to 50 percent of premiums paid in 2014. Businesses with 25 or more full-time employees or that pay average wages of $50,000 or more per year are not eligible to use the credit.

 For more information on the health care credit and to see a draft of Form 8941, go to the IRS website.