Department of the Treasury
Internal Revenue Service
Instructions for Form 8941
Credit for Small Employer Health Insurance Premiums
Section references are to the Internal Revenue Code unless
credit under other rules for qualifying arrangements. This
may include, for example, employers who offer more than
one type of health insurance coverage or whose
insurance provider does not charge the same premium
for all employees enrolled in single (employee-only)
Purpose of Form
coverage. For details, see Notice 2010-82 as discussed
Eligible small employers (defined below) use Form 8941
under More Information on page 5.
to figure the credit for small employer health insurance
For more details, see Employer Premiums Paid,
premiums for tax years beginning after 2009. The
Health Insurance Coverage, and Qualifying Arrangement,
maximum credit is a percentage of premiums the
employer paid during the tax year for certain health
2. You had fewer than 25 full-time equivalent
insurance coverage the employer provided to certain
employees (FTEs) for the tax year. You may be able
employees. But the credit may be reduced by limitations
to meet this requirement even if you had 25 or more
based on the employer’s full-time equivalent employees,
employees. For details, see Individuals Considered
average annual wages, state average premiums, and
Employees and FTE Limitation, later.
state premium subsidies and tax credits.
3. You paid average annual wages for the tax year of
For tax-exempt small employers, the credit is
less than $50,000 per FTE. For details, see Individuals
generally 25% of premiums paid, is also limited to the
Considered Employees and Average Annual Wage
amount of certain payroll taxes paid, and is claimed as a
refundable credit on Form 990-T, Exempt Organization
If you had more than 10 FTEs and average
Business Income Tax Return. A tax-exempt small
annual wages of more than $25,000, the FTE and
employer is an eligible small employer described in
average annual wage limitations (discussed later)
section 501(c) that is exempt from taxation under section
will separately reduce your credit. This may reduce your
501(a). A tax-exempt employer not described in section
credit to zero even if you had fewer than 25 FTEs and
501(c) is generally not eligible to claim this credit.
average annual wages of less than $50,000.
However, a tax-exempt farmers’ cooperative subject to
tax under section 1381 may be able to claim the credit as
Employers treated as a single employer. Treat the
a general business credit as discussed next.
following employers as a single employer to figure the
For all other small employers, the credit is generally
Employers who are corporations in a controlled group
35% of premiums paid, can be taken against both regular
and alternative minimum tax, and is claimed as part of
Employers who are members of an affiliated service
the general business credit on Form 3800, General
Employers who are partnerships, proprietorships, etc.,
If your only source for this credit is a partnership,
under common control. See Regulations sections
S corporation, cooperative, estate, or trust, see
1.414(c)-2, 1.414(c)-3, and 1.414(c)-4 for details.
the Tip under Specific Instructions on page 5.
Tax-exempt employers under common control. See
Regulations section 1.414(c)-5.
Eligible Small Employers
For details, see section 45R(e)(5)(A).
You are an eligible small employer for the tax year if you
No more than one Form 8941 can be filed with a
meet the following three requirements.
tax return, unless the exception described in
1. You paid premiums for employee health insurance
Example 2 below applies.
coverage under a qualifying arrangement. A
qualifying arrangement is generally an arrangement that
Example 1. You are a sole proprietor with two
requires you to pay a uniform percentage (not less than
separate businesses and you file a separate Schedule C
50%) of the premium cost for each enrolled employee’s
(Form 1040) for each business. You must treat both
health insurance coverage (defined on page 3). However,
businesses as a single employer to figure the credit. You
for a tax year beginning in 2010 only, a qualifying
will file one Form 8941 for both businesses.
arrangement includes any arrangement that requires you
Example 2. You and your spouse are both sole
to pay at least 50% of the premium cost for single
proprietors and file a separate Schedule C (Form 1040)
(employee-only) coverage for each employee enrolled in
for each of your separate businesses. Neither spouse
any health insurance coverage you provide to
was an employee of the other spouse or participated in
employees, whether or not you pay a uniform percentage
the management of the other spouse’s business at any
of the health care premium cost for each enrolled
time during the tax year. No more than 50% of the gross
income of either business was derived from royalties,
In addition, certain employers who do not satisfy the
rents, dividends, interest, and annuities and you
2010 transition rule discussed above (because they
otherwise meet the requirements listed in Regulations
contribute less than 50% of the employee-only premium
section 1.414(c)-4(b)(5)(ii). Do not treat both businesses
for some enrolled employees) may still qualify for the
as a single employer to figure the credit. If you and your
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