As discussed in prior editions of Nonprofit Notes, many tax-exempt nonprofit organizations that provide health insurance coverage to their employees can qualify for a special IRS tax credit. Beginning in 2014, the maximum credit increases from 25% to 35% of premiums paid by eligible tax-exempt employers.
To be eligible, tax-exempt employers must have fewer than 25 full-time employees, whose average annual wages are less than $50,800, and must pay at least half the cost of health insurance coverage for their employees. Beginning in 2014, employers must purchase insurance through the Small Business Health Options Program (SHOP) Marketplace to be eligible for the credit.
Tax-exempt organizations that are eligible for the tax credit will receive it as a refund of payroll taxes paid. To claim this credit, tax-exempt employers must file IRS Form 990-T (even if they don’t ordinarily do so) with an attached Form 8941 showing the calculation of the claimed credit. The tax credit can be claimed for only two consecutive years beginning in or after 2014.