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March 21. 2012 Tax Watch: The IRS is shining the spotlight on the Code Sec. 45R small business health care credit and how small businesses and tax-exempt organizations may claim the credit on returns now being filed for the 2011 tax year.

IRS Pushes Small Business Health Care Credit

  • 3/21/2012

IRS Pushes Small Business Health Care Credit

The IRS is shining the spotlight on the Code Sec. 45R small business health care credit, and how small businesses and tax-exempt organizations may claim the credit on returns now being filed for the 2011 tax year. Small businesses and tax-exempt organizations that pay at least half of the premiums for employee health insurance coverage under a qualifying arrangement may be eligible for the credit.

Comment: The Code Sec. 45R credit has been available since 2010, when it was included in the Patient Protection and Affordable Care Act. The IRS reminded employers that, even though their health insurance plan structures and contributions may not have met all the qualifications for the Code Sec. 45R credit in 2010 or 2011, there may still be time to make the necessary changes to qualify for the credit on 2012 returns or in years beyond.

How to claim the credit

An employer may claim the credit in one of three ways based upon filing deadlines:

  • By March 15: For calendar year corporations, by computing the credit on Form 8941, Credit for Small Employer Health Insurance Premiums, and claiming it on Form 3800, General Business Credit.
  • By April 17: For sole proprietors and pass-through owners receiving Schedules K-1, by attaching Forms 8941 and 3800 and entering the credit amount on Form 1040, Line 53.
  • By May 15: for calendar-year tax exempt organizations, by using Form 8941 and claiming the credit on Form 990-T, Line 44f.

The IRS also reminded employers that the credit may be claimed on a return with a properly extended filing date, or on an amended return.

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