May 09, 2011

Small Business Health Care Tax Credit

Question:

We’ve heard that churches and tax-exempt organizations may qualify for the Small Business Health Care Tax Credit. Is this true?

Answer:

Yes, many churches and tax-exempt organizations qualify for the Health Care Tax Credit. If you can agree to all statements listed below, then your church (or other organization) is likely to qualify for the 2010 credit.

1. You paid at least 50% of your employee’s health insurance premiums.
2. You have fewer than 25 full-time equivalent employees during 2010 (you may have more than 25 employees if you have some part time employees).
3. You paid less than $50,000 in average annual wages—but don’t include your minister’s wages in the calculation.
4. You paid the following payroll taxes in 2010: Federal income taxes or Medicare taxes.

Eligible, tax-exempt small employers may claim the refundable credit by filing Form 990-T and Form 8941. For more information, see the Instructions for Form 8941: 

Form 8941 Instructions

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