Tax Credit for Health Insurance Premiums

The IRS provides a tax credit for small businesses and small tax-exempt organizations.  The credit may equal up to 25 percent paid by eligible small tax exempt organizations. Also, since for eligible small tax-exempt organizations the health insurance premium payments are more than the total credit, the credit is refundable.

It is advisable to talk to a tax preparer to determine if you might be eligible to receive a credit.

Below are some links to help determine if you might be eligible.

Who is eligible for the credit? Employers that…

• pay at least half the cost of qualified “single” (employee-only) health insurance coverage for their employees

• have fewer than 25 full-time-equivalent employees. For example, two half-time workers count as one full-time equivalent employee, and

• pay wages averaging less than $50,000 per full-time-equivalent employee per year.

To estimate possible credit.

Use this estimator to find out whether you may be eligible and get an estimate of how much you might receive.

How to claim the credit.

Small tax-exempt organizations use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit.  Tax-exempt organizations include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax.