IRS Issues Draft Form for Small Business Health Care Tax Credit

Now available: A draft version of the form that small businesses and tax-exempt organizations will need to use to calculate the small business health care tax credit when they file income tax returns next year.

The IRS also announced how eligible tax-exempt organizations –– which do not generally file income tax returns –– will claim the credit.

The IRS has posted a draft of Form 8941 on IRS.gov. Both small businesses and tax-exempt organizations will use the form to calculate the credit. A small business will then include the amount of the credit as part of the general business credit on its income tax return, according to the IRS. Tax-exempt organizations will instead claim the small business health care tax credit on a revised Form 990-T, currently used by tax-exempt organizations to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations –– even those that owe no tax on unrelated business income –– also to claim the small business health care tax credit.

The final version of Form 8941 and its instructions will be available later this year.

The small business health care tax credit was included in the Affordable Care Act effective this year. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have, according to the IRS.