The Internal Revenue Service published a press release on September 7th that provides some relief to small businesses who are adjusting to the new health care tax credit.
The IRS provided rough versions of the forms that will be used to help both small
businesses and tax-exempt associations calculate and claim tax credits for the 2011 tax season.
The draft of Form 8941 has been made public via the IRS website and will be used by small businesses to help calculate their credits. After using this form, small businesses should treat this as part of their general business credit when completing their income tax return.
Eligible organizations, however, should claim this credit on a new version of Form 990-T, which previously was used to account for taxes on non-business-related income. The changes made to this form will be applicable for 2011 and will permit these organizations to claim the small business health care credit. Note that this is relevant even to organizations that do not report any unrelated business income.
These changes stem from the health care tax credit that was incorporated into the Affordable Care Act, signed by Obama earlier this year. This credit was included as an incentive to small business owners to provide health insurance, specifically those employers who offer moderate or lower-level wages.
When filing between 2010 and 2013, the credit limit for small business owners is 35% of premiums paid and 25% for tax-exempt associations. In 2014 these percentages are due to increase to 50% and 35% respectively.
The IRS will post the finalized copies of these forms later this year.