The IRS released this week their draft version of the form that small businesses and tax-exempt organizations will use to calculate the small business health care tax credit when they file returns next year. The draft of form 8941 and instructions are on the IRS website. Tax-exempt organizations will claim the small business health care tax credit on a revised Form 990-T, currently used by tax-exempt groups to report and pay taxes on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible tax-exempt organizations to also claim the health care tax credit.

The final version of Form will be available later this year. For tax years 2010 to 2013, the maximum credit is 25 percent of premiums paid by eligible tax-exempt organizations. Beginning in 2014, the maximum tax credit will go up to 35 percent of premiums paid by eligible tax-exempt employers. The maximum credit goes to smaller employers – those with 10 or fewer full-time employees paying average annual wages of $25,000 or less. The credit is completely phased out for employers that have 25 employees or more or that pay average wages of $50,000 per year or more.