From: Rev. Karen McArthur
Date: 24 February 2012 (Updated April 2013)
Re: Credit for Small Employer Health Insurance Premiums
As a part of the Patient Protection and Affordable Care Act signed into law by President Obama in March 2010, small employers may qualify for a refund of a portion of the health insurance premiums they have paid, beginning January 1, 2010. This refund may be claimed by filing IRS Forms 8941 and 990-T. This is the third year that this credit has been available.
The spreadsheet and tax forms for the 2012 Tax Credit have been updated. There are a few new features this year:
This memo, along with the attached spreadsheet, should provide the information needed to calculate the figures required for both forms. However, it includes a standard disclaimer:
This memo and spreadsheet seek to provide current and accurate general information for churches regarding the Small Employer Health Insurance Premiums Credit. However, if you are seeking tax advice regarding your church, you may wish to consult an accountant who can review your situation personally and offer her or his professional and specific advice to your congregation.
The accompanying documents can be accessed through the following links:
To qualify for the tax credit, an employer must:
1) Pay for a portion of its employees’ health coverage.
a. The employer’s portion must be at least 50% of the premium for single (employee-only) coverage.
b. The percentage must be uniform for all covered employees – that is, if you pay 100% for the full-time pastor’s insurance, you have to pay 100% for every full-time employee unless they have waived coverage.
2) Have fewer than 25 full-time equivalent employees
3) Have non-clergy average wages per full-time equivalent employee of less than $50,000
4) Make federal tax deposits for federal withholding or Medicare (employee portion and employer portion)
The attached spreadsheet will allow you to check to see if your church is entitled to a credit. It will calculate the amount of the credit and generate the line-by-line figures for IRS Form 8941 and IRS Form 990-T.
IRS Form 990-T is due by May 15th for those with a fiscal year ending December 31st, or 4.5 months after the fiscal year end. No matter when your fiscal year ends, the tax credit is for premiums paid during the previous calendar year.
Please note that only one form 990-T and 8941 may be filed for a legal entity. If you operate a nursery school or thrift shop or other program that you consider to operate independently of the church, you should verify that the school or shop is indeed a separate legal entity before filing these forms. Filing two sets of forms for one corporation or unincorporated association would result in inaccurate information being filed with the IRS.
If you do not qualify for a tax credit this year, this spreadsheet may help you to determine whether any personnel policy changes would make a difference in the calculation of your tax credit in the future.
If you have not yet filed for this tax credit for 2010 or 2011, please note that IRS returns may be filed up to three years late – so the final deadline for filing for 2010 credits would be May 15, 2014. If you would like a copy of the spreadsheet for 2010 or 2011, please contact Karen McArthur; there are minor differences for previous years.
I hope this information is helpful to you and your congregation. If you have further questions, please contact Karen McArthur at firstname.lastname@example.org.
***This work was made possible by contributions to the MACUCC Friends of the Conference Fund.***