IRS Releases Draft 2019 Instructions for Form 8941

January 7, 2020

On December 10, 2019, the IRS released a draft of the 2019 Instructions for Form 8941, Credit for Small Employer Health Insurance Premiums. This publication provides a general overview of the purpose and eligibility requirements for the small business health care tax credit, as well as specific instructions for completing the form.

As background, the small business health care tax credit allows eligible small employers that offer health insurance coverage to their employees to take a tax credit of up to 50% of the nonelective contributions they pay toward the premium cost. Tax-exempt eligible small employers are permitted a tax credit of up to 35% of such contributions. To qualify, a small employer generally must purchase the health coverage for its employees through SHOP. For tax years beginning after 2013, this credit is only available for a period of two consecutive tax years.

The instructions for Form 8941 provide the necessary information to compute the tax credit, and include worksheets to determine the applicable number of employees, average wages, and average premiums for each state’s small group health insurance market. The IRS modifies the form instructions periodically to reflect changes in regulations and/or numeric values, such as the average premium amounts. As standard procedure, the IRS releases a preliminary draft of the updated guide prior to final publication. 

Employers that could potentially claim this credit should be aware of the release of the draft instructions. The IRS is accepting comments regarding the proposed publication. Accordingly, employers should also recognize that changes to the released version may occur prior to finalization.

Draft Instructions for Form 8941 »