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Generating Form 8941, Credit for Small Employer Health Insurance Premiums

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Generating Form 8941, Credit for Small Employer Health Insurance Premiums

Eligible small employers can use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit for small employer health insurance premiums. The credit is limited by the percentages of premiums the employer paid during the tax year for certain health insurance coverage the employer provided to certain employees.

This article will assist you with generating Form 8941 in Lacerte. Select the applicable module below for instructions.

 

Refer to the IRS Instructions for Form 8941 for more information.

  1. Go to Screen 20, Credits.
  2. Select Other Credits from the left navigation panel.
  3. Scroll down to the Credit for Small Employer Health Insurance Premiums (8941) section.
    1. You may also select this section from the lower-left Sections list.
  4. Check the box labeled Eligible to claim credit (credit was not claimed on 2018 return. See Form 8941, line C) (MANDATORY).
  5. Select the Small group market from the dropdown list.
    • Select the biggest small group market in which the employer provides health care coverage. This entry can be overridden at the employee level if the employer has employees in more than one market. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
  6. Complete the employee grid to enter detailed information for each employee:
    • Name or ID
      • This description isn't printed on any form included in the tax return, but is included in worksheets that show Form 8941 calculations.
    • Wages Paid 
      • This amount is used to compute average wages on Form 8941.
    • Hours of Service [O]
      • The program assumes employees have a full year's worth of Hours of Service (2,080). If an employee has less, enter an amount to override the program default.
    • Coverage: 1=Single,2=Family
      • An entry is required for the program to consider the employee enrolled in a qualified plan. The program also uses this entry when computing the small market rate premiums.
    • Small Group Market [O]
      • To override the default entry above the grid, select the small group market in which the employee has health care coverage. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
    • Employer Premiums Paid
      • This is an employee by employee entry because the calculation of allowed premiums (smaller of premiums paid or small group market rates) is applied at the employee level and must be pro-rated when an employee is not covered for the entire year.
    • Percent of Premiums Paid [O]
      • The program assumes the employer pays 100% of health insurances premiums for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
    • Percentage of Year Enrolled (xx.xx)[O]
      • The program assumes each employee with an entry in "Coverage" is a full year employee for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
 

If you aren't using the employee grid, overrides are available for Form 8941 in the entries below the grid.

The calculated amount to be passed through to the partners will be on Form 8941, line 16.  From here, the amount flows to the Schedule K, line 15f and is allocated to the partners on the Schedule K-1 (1065), box 15 with a code P - Other Credits. Details about the credit will be on the supplemental information page for the K-1.

An adjustment for the Small Employer Health Insurance Premiums Credit will be made on Form 1065, page 1, line 20 in the amount of the credit.

  1. Go to Screen 28, General Business Credits (3800).
  2. Scroll down to the Small Employer Health Insurance Premiums Credit (8941) section.
    • You may also select this section from the lower-left Sections list.
  3. Check the box labeled Eligible to claim credit (credit was not claimed on 2018 return. See Form 8941, line C) (MANDATORY).
  4. Select the the Small group market dropdown menu.
    • Select the biggest small group market in which the employer provides health care coverage. This entry can be overridden at the employee level if the employer has employees in more than one market. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
  5. Complete the employee grid to enter detailed information for each employee:
    • Name or ID
      • This description isn't printed on any form included in the tax return, but is included in worksheets available to you for reviewing Form 8941 calculations.
    • Wages Paid
      • This amount is used to compute average wages on Form 8941.
    • Hours of Service [O]
      • The program assumes employees have a full year's worth of Hours of Service (2,080). If an employee has less, enter an amount to override the program default.
    • Coverage 1=Single, 2=Family
      • An entry is required for the program to consider the employee enrolled in a qualified plan. The program also uses this entry when computing the small market rate premiums.
    • Small Group Market [O]
      • To override the default entry above the grid, select the small group market in which the employee has health care coverage. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
    • Employer Premiums Paid
      • This is an employee by employee entry because the calculation of allowed premiums (smaller of premiums paid or small group market rates) is applied at the employee level and must be pro-rated when an employee is not covered for the entire year.
    • Percentage of Premiums Paid [O]
      • The program assumes the employer pays 100% of health insurances premiums for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
    • Percentage of Year Enrolled [O] 
      • The program assumes each employee with an entry in "Coverage" is a full year employee for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
 

If you aren't using the employee grid, overrides are available for Form 8941 in the entries below the grid.

The calculated amount on Form 8941, line 16 will go to Form 3800, Part III, line 4h. The allowable credit flows to the Schedule J (1120), line 5c.

An adjustment for the Small Employer Health Insurance Premiums Credit will be made on Form 1120, page 1, line 26 in the amount of the credit. This adjustment can be overridden in Screen 20, Deductions in the Reduction for small employer health insurance premiums credit [O] field.

  1. Go to Screen 26, Credits.
  2. Select Schedule K Credits from the left navigation menu.
  3. Scroll down to the Small Employer Health Insurance Premiums Credit (8941) section.
    • You may also select this section from the lower-left Sections list.
  4. Check the box labeled Eligible to claim credit (credit was not claimed on 2018 return. See Form 8941, line C) (MANDATORY).
  5. Select the the Small group market dropdown menu.
    • Select the biggest small group market in which the employer provides health care coverage. This entry can be overridden at the employee level if the employer has employees in more than one market. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
  6. Complete the employee grid to enter detailed information for each employee:
    • Name or ID
      • This description isn't printed on any form included in the tax return, but is included in worksheets available to you for reviewing Form 8941 calculations.
    • Wages Paid
      • This amount is used to compute average wages on Form 8941.
    • Hours of Service [O]
      • The program assumes employees have a full year's worth of Hours of Service (2,080). If an employee has less, enter an amount to override the program default.
    • Coverage 1=Single, 2=Family
      • An entry is required for the program to consider the employee enrolled in a qualified plan. The program also uses this entry when computing the small market rate premiums.
    • Small Group Market [O]
      • To override the default entry above the grid, select the small group market in which the employee has health care coverage. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
    • Employer Premiums Paid
      • This is an employee by employee entry because the calculation of allowed premiums (smaller of premiums paid or small group market rates) is applied at the employee level and must be pro-rated when an employee is not covered for the entire year.
    • Percentage of Premiums Paid [O]
      • The program assumes the employer pays 100% of health insurances premiums for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
    • Percentage of Year Enrolled [O] 
      • The program assumes each employee with an entry in "Coverage" is a full year employee for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
 

If you aren't using the employee grid, overrides are available for Form 8941 in the entries below the grid.

The calculated amount to be passed through to the partners will be on Form 8941, line 16. From here, the amount flows to the Schedule K, line 13g and is allocated to the shareholders on the Schedule K-1 (1120S), box 13 with a code P - Other Credits.  Details of the credit will be on the supplemental information page for the K-1.

An adjustment for the Small Employer Health Insurance Premiums Credit will be made on Form 1120S, page 1, line 19 in the amount of the credit.  This adjustment can be overridden in Screen 15, Deductions in the Reduction for small employer health insurance premiums credit [O] field.

  1. Go to Screen 45Credits (990-T).
  2. Scroll down to the Credit for Small Employer Health Insurance Premiums (8941) section.
  3. Check the box labeled Filing Form 990-T for Form 8941 credit only.
    • This credit is only available with Form 990-T. Check this box, if filing a Form 990-T only to claim this credit.
  4. Check the box Eligible to claim credit (credit was not claimed on 2018 return.  See Form 8941, line C) (MANDATORY).
  5. Select the the Small group market dropdown menu.
    • Select the biggest small group market in which the employer provides health care coverage. This entry can be overridden at the employee level if the employer has employees in more than one market. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
  6. Complete the employee grid to enter detailed information for each employee:
    • Name or ID
      • This description isn't printed on any form included in the tax return, but is included in worksheets available to you for reviewing Form 8941 calculations.
    • Wages Paid
      • This amount is used to compute average wages on Form 8941.
    • Hours of Service [O]
      • The program assumes employees have a full year's worth of Hours of Service (2,080). If an employee has less, enter an amount to override the program default.
    • Coverage 1=Single, 2=Family
      • An entry is required for the program to consider the employee enrolled in a qualified plan. The program also uses this entry when computing the small market rate premiums.
    • Small Group Market [O]
      • To override the default entry above the grid, select the small group market in which the employee has health care coverage. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
    • Employer Premiums Paid
      • This is an employee by employee entry because the calculation of allowed premiums (smaller of premiums paid or small group market rates) is applied at the employee level and must be pro-rated when an employee is not covered for the entire year.
    • Percentage of Premiums Paid [O]
      • The program assumes the employer pays 100% of health insurances premiums for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
    • Percentage of Year Enrolled [O] 
      • The program assumes each employee with an entry in "Coverage" is a full year employee for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
 

If you aren't using the employee grid, overrides are available for Form 8941 in the entries below the grid.

The Form 8941 Credit for Small Employer Health Insurance Premiums is claimed as a refundable credit on Form 990-T for an exempt organization. The calculated amount will be on Form 8941, line 20. This amount will flow to the Form 990-T, line 45f.

  1. Go to Screen 34, General Business & Vehicle Credits.
  2. Under the General Business, Vehicle, and Passive Activity Credits section, enter the Name of activity (automatic if blank).
  3. Under the Credits section, select the applicable Form (Ctr+T) (Schedule C or Schedule F).
  4. Select the Activity name or number (Ctrl+T).
  5. Select Taxpayer, Spouse, or Joint.
    • The program defaults to Taxpayer.
  6. Scroll down to the Small employer Health Insurance Premiums Credit (8941) section.
    • You may also select this section from the lower-left Sections list.
  7. Check the box labeled Paid premiums for health coverage through a SHOP marketplace, if applicable.
  8. Enter the Marketplace Identifier.
    • If premiums weren't paid through a SHOP marketplace, Form 8941, line A indicates you shouldn't file Form 8941.
  9. Select the Small group market from the dropdown list.
    • Select the biggest small group market in which the employer provides health care coverage. This entry can be overridden at the employee level if the employer has employees in more than one market. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
  10. Complete the employee grid to enter detailed information for each employee:
    • Name or ID
      • This description isn't printed on any form included in the tax return, but is included in worksheets that show Form 8941 calculations.
    • Wages Paid 
      • This amount is used to compute average wages on Form 8941.
    • Hours of Service [O]
      • The program assumes employees have a full year's worth of Hours of Service (2,080). If an employee has less, enter an amount to override the program default.
    • Coverage: 1=Single,2=Family
      • An entry is required for the program to consider the employee enrolled in a qualified plan. The program also uses this entry when computing the small market rate premiums.
    • Small Group Market [O]
      • To override the default entry above the grid, select the small group market in which the employee has health care coverage. This list may be expanded by the Secretary of Health and Human Services if that office determines separate average premiums will apply for areas within a state.
    • Employer Premiums Paid
      • This is an employee by employee entry because the calculation of allowed premiums (smaller of premiums paid or small group market rates) is applied at the employee level and must be pro-rated when an employee is not covered for the entire year.
    • Percent of Premiums Paid [O]
      • The program assumes the employer pays 100% of health insurances premiums for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
    • Percentage of Year Enrolled (xx.xx)[O]
      • The program assumes each employee with an entry in "Coverage" is a full year employee for purposes of this credit calculation. Enter an amount to override the program assumption. This entry will be used to calculate the small group market premium reported on Worksheet 4.
 

If you aren't using the employee grid, overrides are available for Form 8941 in the entries below the grid.

The program will calculate the program based on this information and won't automatically reduce expenses for the small employer health insurance premiums credit on the Schedule C or F. 

To do this, use the input the amount in the Health insurance premiums for Form 8941 credit field on Screen 16, Business Income (Sch. C) under the Expenses section and Screen 19, Farm Income (Sch. F, 4835) under the Farm Expenses section. 

This amount will reduce the amount of insurance expense taken to eliminate double counting of the amount. This field doesn't print directly on a field in the tax return. It reduces the amount reported on the Schedule C for Employee Benefit Programs.

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