How to Get Your ACA Tax Credit When You’re a Tax-Exempt Organization

Blog
February 12, 2015

Under the Affordable Care Act (ACA), a small employer can claim a portion of insurance premiums paid as a tax credit. But what do you do if you are a tax-exempt organization? Don’t worry! You can still claim the credit if your organization is eligible. Eligible tax-exempt organizations can claim up to 35% of premiums paid. The credit is available for eligible employers for two consecutive tax years.

An eligible tax-exempt organization would file a Form 990-T and fill in line 44F, Credit for Small Employer Health Insurance Premiums, and attach a Form 8941, Credit for Small Employer Health Insurance Premiums.

The tax-exempt organization can file a Form 990-T in order to request the credit even if there is no unrelated business income to report. Just follow the instructions located here and look for details for Line 44F.

According to the IRS, “to be eligible for the credit, an eligible small employer generally must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace.”

To be eligible, you must meet three requirements:

  1. You paid premiums for employee health insurance coverage under a qualifying arrangement. This would generally be one that requires you to pay a uniform percentage of not less than 50% (with some exceptions for different tiers of coverage or list billing arrangements).
  2. You had fewer than 25 full-time employees for the year.
  3. You paid *average* annual wages per employee of less than $51,000.

The IRS has worksheets to help calculate this in the instructions for Form 8941.

For more information on business matters affecting nonprofit organizations, contact Aronson’s Nonprofit & Association Industry Services Group or Carol Barnard at 301.231.6200.