If you’re a small business owner who has provided health insurance coverage to your employees, you may be eligible for a tax credit. To claim this credit, you’ll need to file Form 8941, Credit for Small Employer Health Insurance Premiums, with the Internal Revenue Service (IRS).
In this blog post, we’ll take a closer look at what Form 8941 is, who needs to file it, how to fill out the form, and how to file it.
What is Form 8941?
Form 8941 is a tax form used by small businesses to claim a credit for providing health insurance coverage to their employees. The credit is designed to help small businesses afford the cost of health insurance premiums and is available to businesses with fewer than 25 full-time equivalent employees (FTEs) with an average annual wage of less than $55,000.
Who needs to file Form 8941?
If you’re a small business owner who has provided health insurance coverage to your employees and meets the eligibility criteria outlined above, you may be able to claim the Small Business Health Care Tax Credit. To do so, you’ll need to file Form 8941.
How to fill out Form 8941
Filling out Form 8941 is a bit more complicated than some other tax forms, but it’s still manageable if you follow these steps:
Step 1: Calculate your full-time equivalent employees (FTEs) and average annual wages
To determine your eligibility for the credit, you’ll need to calculate your FTEs and average annual wages. FTEs are calculated by adding up the total hours worked by all of your employees in a year and dividing that number by 2,080 (which is the number of hours worked in a year by a full-time employee). The result is the number of FTEs you have.
Average annual wages are calculated by adding up the total wages paid to all employees in a year and dividing that number by the number of FTEs you have. This will give you an average annual wage per FTE.
Step 2: Complete Part I of Form 8941
In Part I of Form 8941, you’ll need to provide basic information about your business, such as your name, address, and Employer Identification Number (EIN).
Step 3: Complete Part II of Form 8941
In Part II of Form 8941, you’ll need to enter your FTE count and average annual wage. You’ll also need to indicate whether you are a tax-exempt organization.
Step 4: Complete Part III of Form 8941
In Part III of Form 8941, you’ll need to provide information about the health insurance premiums you paid for your employees. This includes the total amount of premiums paid and the portion of the premiums paid that are eligible for the credit.
Step 5: Complete Part IV of Form 8941
In Part IV of Form 8941, you’ll need to calculate your credit using the information you provided in Parts II and III. You’ll also need to include any other credits you’re claiming on your tax return.
Step 6: Complete Part V of Form 8941
In Part V of Form 8941, you’ll need to provide additional information about your business, such as your North American Industry Classification System (NAICS) code.
Step 7: Review and sign the form
Review the form to ensure that all information is accurate and complete. Then, sign and date the form.
How to file Form 8941
To file Form 8941, you’ll need to include it with your business tax return. This is usually done on Form 1040, Schedule C, Schedule E, or Schedule F, depending on the type of business
