Form 8941
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Form 8941: Credit for Small Employer Health Insurance Premiums

This article will discuss the Form 8941, used by eligible small employers to figure the credit for small employer health insurance premiums. It will also cover the requirements for eligibility, credit period, employer premiums paid, health insurance coverage, and qualifying arrangement.

What is Form 8941?

Form 8941 is used by eligible small employers to calculate the credit available for small employer health insurance premiums. It can be taken as a refundable credit on Form 990-T for tax-exempt eligible small employers and as part of the general business credit on Form 3800 for all other eligible employers, with the maximum amount varying depending on the situation. In order to be eligible, employers must have fewer than 25 full-time equivalent employees, paid average annual wages that are less than $58,000 per FTE for the tax year, and paid premiums for employee health insurance coverage under a qualifying arrangement. The credit is only available for a 2-consecutive-tax-year period beginning with the first tax year in which Form 8941 is properly filed in with an affirmative amount.

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IRS Form 8941 – Who Needs to Fill It Out?

Form 8941 must be completed and filed by eligible small employers- defined as those who paid premiums for employee health insurance under a qualifying arrangement, had fewer than 25 full-time equivalent employees, and paid average annual wages of less than $58,000 per FTE- in order to claim the credit for small employer health insurance premiums. Particular groups of employers, such as companies in a controlled group, must be treated as one employer. Depending on the tax-exempt status of the employer, the maximum credit can be 35-50% of premiums paid, and is claimed either as a refundable credit on Form 990-T or as part of the general business credit on Form 3800. The credit period is a two-consecutive-tax-year period beginning with the first tax year the employer files Form 8941. Only premiums for health insurance coverage provided to employees, not tobacco surcharges or wellness programs, can be counted when figuring the credit.

Step-by-Step: Form 8941 Instructions For Filling Out the Document

To properly complete FILM 8941, eligible small employers must first meet three requirements: they must have paid premiums for employee health insurance coverage under a qualifying arrangement, had fewer than 25 full-time equivalent employees, and paid average annual wages for the tax year of less than $58,000. Additionally, employers treated as a single employer–for instance, those in an affiliated service group or under common control–must use one form. FILM 8941 may only be filed twice with the same tax return if two eligible small employers’ premiums were not paid through the same qualifying arrangement. When filling out the form, employer premiums paid for health insurance coverage must contextued to be paid under a qualifying arrangement for individuals considered emplyess, while wellness and tobacco surcharge programs are to be treated differently. Finally, the credit period, during which the credit can be claimed, is a two-consecutive-tax-year period beginning with the first tax year in which the form is properly filled out and submitted.

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Below, we present a table that will help you understand how to fill out Form 8941.

Form 8941 Instructions
To claim the Small Employer Health Insurance Credit, eligible small employers must meet specific requirements.
  • Ensure that you meet the criteria for eligibility, including employee count and average annual wages.
  • Understand the treatment of wellness and tobacco surcharge programs.
  • Be aware of the credit period and how to calculate the credit.
  • File the form with your tax return and retain necessary records.
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Do You Need to File Form 8941 Each Year?

Yes, each year an eligible small employer or a tax-exepmt eligible small employer that meets certain criteria will need to file Form 8941. This form is used to figure the credit that employers may be eligible for, for premium costs paid on qualifying health insurance coverage and must be filed with the employer’s income tax return. Eligible small employers are usually those employers with fewer than 25 full-time equivalent employees that pay average annual wages of less than $58,000 per FTE. Partnerships, S corporations, cooperatives, estates, trusts, and tax-exempt eligible small employers are required to file this form, but other taxpayers must only report the credit on Form 3800. For tax years beginning after 2013, a two-consecutive-tax-year period applies for claiming the credit.

Download the official IRS Form 8941 PDF

On the official IRS website, you will find a link to download Form 8941. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 8941

Sources:

https://www.irs.gov/forms-pubs/about-form-8941

https://www.irs.gov/instructions/i8941

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