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Generating Form 8941 Credit for Small Employer Health Insurance Premiums

SOLVEDby IntuitProConnect Tax4Updated October 01, 2021

Eligible small employers use Form 8941 to calculate the credit for small employer health insurance premiums beginning in the 2010 tax year. The maximum credit allowed is generally a percentage of premiums the employer paid during the tax year for certain health insurance coverage provided to certain employees.

Click on your tax type below to view detailed instructions. For more information, see Form 8941 instructions.

  1. On the left-hand menu, select Schedule K, then Credits, then Other Credits from the dropdown menu.
  2. Click on the SEHIP tab at the top of the input screen.
  3. Under the section Credit for Small Employer Health Insurance Premiums (8941), select a state from the Small group market dropdown menu.
    1. Select the largest small group market in which the employer provides health care coverage.
  4. Complete the employee input fields to enter detailed information for each employee:
    1. 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.
    2. Wages Paid: This amount is used to compute average wages on Form 8941.
    3. Hours of Service [Override]: The program assumes employees have a full year's worth of service hours (2,080). If an employee has fewer, enter an amount to override the program default.
    4. 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 small market rate premiums.
    5. Small Group Market [Override]: To override the default entry, above, in the Credit for Small Employer Health Insurance Premiums (8941) section, 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.
    6. Employer Premiums Paid: This is an employee-by-employee entry because the calculation of allowed premiums (the smaller of premiums paid or small group market rates) is applied at the employee level and must be pro-rated when an employee isn't covered for the entire year.
    7. Percent of Premiums Paid [Override]: The program assumes the employer pays 100% of health insurance 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.
    8. Percentage of Year Enrolled (xx.xx)[Override]: The program assumes each employee with an entry in the field Coverage: 1=Single, 2=Family, is a full year employee for purposes of the 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.
  5.  If the employee grid isn't used, overrides are available in the entries below the employee input fields.

Where the credit appears

  • The calculated amount to be passed through to the partners appears on line 16 of Form 8941.
  • On Schedule K, the credit appears on line 15f. It's allocated to partners on Schedule K-1 (1065), box 15 with a code P Other Credits.
    • Details of the credit appear on the K-1 supplemental information page.
  • A credit adjustment in the amount of the Small Employer Health Insurance Premiums Credit is made on Page 1, Line 20 of Form 1065.
  1. On the left-hand menu, select Credits, then General Business Credits.
  2. Click on the SEHIP tab at the top of the input screen.
  3. Under the section Credit for Small Employer Health Insurance Premiums (8941), select a state from the Small group market dropdown menu.
    • Select the largest 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.
  4. Complete the employee input fields to enter detailed information for each employee:
    1. 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.
    2. Wages Paid: This amount is used to compute average wages on Form 8941.
    3. Hours of Service [Override]: The program assumes employees have a full year's worth of service hours (2,080). If an employee has fewer, enter an amount to override the program default.
    4. 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 small market rate premiums.
    5. Small Group Market [Override]: To override the default entry, above, in the Credit for Small Employer Health Insurance Premiums (8941) section, 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.
    6. Employer Premiums Paid: This is an employee-by-employee entry because the calculation of allowed premiums (the smaller of premiums paid or small group market rates) is applied at the employee level and must be pro-rated when an employee isn't covered for the entire year.
    7. Percent of Premiums Paid [Override]: The program assumes the employer pays 100% of health insurance 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.
    8. Percentage of Year Enrolled (xx.xx)[Override]: The program assumes each employee with an entry in the field Coverage: 1=Single, 2=Family, is a full year employee for purposes of the 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.
  5.  If the employee grid isn't used, overrides are available in the entries below the employee input fields.

Where the credit appears

  • The calculated amount on Form 8941, Line 16 flows to Line 4h of Form 3800, Part III.
  • On Schedule J (1120), the credit appears on Line 5c.
  • On Form 1120, a credit adjustment is made on Page 1, Line 26. 
    • This adjustment can be overridden in the Deductions section under the subsection Other. Enter the adjustment in the field Reduction for small employer health insurance premiums credit [Override].
  1. On the left-hand menu, select Schedule K, then Schedule K Credits.
  2. Click on the SEHIP tab at the top of the input screen.
  3. Under the section Credit for Small Employer Health Insurance Premiums (8941), select a state from the Small group market dropdown menu.
    • Select the largest 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.
  4. Complete the employee input fields to enter detailed information for each employee:
    1. 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.
    2. Wages Paid: This amount is used to compute average wages on Form 8941.
    3. Hours of Service [Override]: The program assumes employees have a full year's worth of service hours (2,080). If an employee has fewer, enter an amount to override the program default.
    4. 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 small market rate premiums.
    5. Small Group Market [Override]: To override the default entry, above, in the Credit for Small Employer Health Insurance Premiums (8941) section, 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.
    6. Employer Premiums Paid: This is an employee-by-employee entry because the calculation of allowed premiums (the smaller of premiums paid or small group market rates) is applied at the employee level and must be pro-rated when an employee isn't covered for the entire year.
    7. Percent of Premiums Paid [Override]: The program assumes the employer pays 100% of health insurance 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.
    8. Percentage of Year Enrolled (xx.xx)[Override]: The program assumes each employee with an entry in the field Coverage: 1=Single, 2=Family, is a full year employee for purposes of the 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.
  5.  If the employee grid isn't used, overrides are available in the entries below the employee input fields.

Where the credit appears

  • The calculated amount to be passed through to the partners appears on line 16 of Form 8941.
  • On Schedule K, the credit appears on line 13g. It's allocated to partners on Schedule K-1 (1120S), box 13 with a code P, Other Credits.
    • Details of the credit appear on the K-1 supplemental information page.
  • On Form 1120S, a credit adjustment is made on Page 1, Line 19. 
    • This adjustment can be overridden in the Deductions section under the subsection Other. Enter the adjustment in the field Reduction for small employer health insurance premiums credit [Override].

For an exempt organization, the Credit for Small Employer Health Insurance Premiums (Form 8941) is claimed as a refundable credit on Form 990-T.

  1. On the left-hand menu, select Credits & Taxes, then Credits (990-T).
  2. Under the section Credit for Small Employer Health Insurance Premiums (8941), check the box 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.
  3. Select a state from the Small group market dropdown menu.
    • Select the largest 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.
  4. Complete the employee input fields to enter detailed information for each employee:
    1. 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.
    2. Wages Paid: This amount is used to compute average wages on Form 8941.
    3. Hours of Service [Override]: The program assumes employees have a full year's worth of service hours (2,080). If an employee has fewer, enter an amount to override the program default.
    4. 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 small market rate premiums.
    5. Small Group Market [Override]: To override the default entry, above, in the Credit for Small Employer Health Insurance Premiums (8941) section, 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.
    6. Employer Premiums Paid: This is an employee-by-employee entry because the calculation of allowed premiums (the smaller of premiums paid or small group market rates) is applied at the employee level and must be pro-rated when an employee isn't covered for the entire year.
    7. Percent of Premiums Paid [Override]: The program assumes the employer pays 100% of health insurance 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.
    8. Percentage of Year Enrolled (xx.xx)[Override]: The program assumes each employee with an entry in the field Coverage: 1=Single, 2=Family, is a full year employee for purposes of the 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.
  5.  If the employee grid isn't used, overrides are available in the entries below the employee input fields.
  6. Enter the total amount of certain payroll taxes in the field Payroll taxes paid for purposes of this credit
    • This amount flows to Form 8941, line 19.

Where the credit appears

  • On Form 8941, the amount appears on line 20.
  • On Form 990-T, the amount appears on line 44f.
  1. On the left-hand menu, select Credits, then General Business and Vehicle Cr.
  2. Under the Credits section, select Schedule C or Schedule F for the Form (Click on arrow to select from list)
  3. Choose the Activity name from the list.
  4. Click on the SEHIP section at the top of the input.
  5. Enter the plan's Marketplace Identifier, and check any boxes that apply.
  6. Choose a state from the Small group market dropdown menu.
    • If multiple apply, select the largest market in which the employer provides health care coverage.
  7. Click inside the Employer premiums paid (Click on button to expand) field. Then click the + plus sign that appears beside the field.
  8. Complete the grid with the following required details for each employee:
    1. Name or ID: This description isn't printed on any form included in the tax return, but is included in worksheets for your review.
    2. Wages Paid: This amount is used to compute average wages on Form 8941.
    3. 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 small market rate premiums.
    4. Employer Premiums Paid: This is an employee-by-employee entry because the calculation of allowed premiums (the smaller of premiums paid or small group market rates) is applied at the employee level and must be prorated when an employee isn't covered for the entire year.
  9. Enter any overrides that apply for the employee:
    • Small Group Market [Override]: To override the default entry selected above for this employee.
    • Hours of Service [Override]: The program assumes employees have a full year's worth of service hours (2,080). If an employee has fewer, enter an amount to override the program default.
    • Percent of Premiums Paid [Override]: The program assumes the employer pays 100% of health insurance premiums for purposes of this credit calculation.
    • Percentage of Year Enrolled (xx.xx)[Override]: The program assumes each employee with an entry in the field Coverage: 1=Single, 2=Family, is a full year employee for purposes of the credit calculation.
  10.  Once the employee grid is complete, click the OK button to return to the full input screen.
  11. If applicable, enter the amount of Amount of state tax subsidies / credits provided for premiums paid (Line 10) and Flow through credit as patron of cooperative.

The rest of Form 8941 will be calculated based on your entries in the employee grid, unless you choose to override each line with amounts you've already calculated.

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