The deadline for filing Forms 8941 and 990-T to claim a refund of the small business health care tax credit for 2011 is May 15, 2012! If your church qualifies for this credit, you are encouraged to take advantage of these unexpected resources. If your church paid health insurance premiums, has less than 25 full-time equivalent employees, pays average non-clergy wages of less than $50,000, and paid any employment taxes (like for other lay staff or taxes withheld voluntarily for your pastor), your church may qualify. A real, live NC Conference pastor recently completed the forms and had this to say about the process:
“Wow! I just finished calculating the tax credit for health insurance premiums for our church and, if I’ve calculated correctly, we have $1,074.00 coming as a credit against our employment taxes — free money from the IRS for our little church. This is a tax credit to the church against the employment taxes the church pays. That is a significant unexpected bonus to our budget and might help us to make apportionments, buy Sunday School curriculum, or engage in new missions, ministry, and evangelism. I couldn’t be more excited! I know that many of our clergy colleagues may have seen the announcement in the e-news, but not followed up to fill out the IRS forms. Who wants to fill out IRS forms?…Who knows how to fill out IRS forms? Really, the forms are not too bad and the General Board of Pension and Health Benefits has provided some great guidance with line-by-line instructions. I bet the Treasurer’s office will answer questions, and I will, too!
Most of the churches in our conference are eligible. If the church pays any employment taxes (including federal withholding), participates in the conference health plan, has fewer than 25 full-time equivalent employees, and average non-clergy pay is less than $50,000, then it is worth checking into it. The only significant group of churches that might not be eligible are those where the pastor is the only staff and he/she pays their own taxes directly to the IRS. If your church is in that situation, consider whether it is worth the pastor having their taxes withheld and paid by the church monthly (rather than doing their own estimated taxes directly), it could mean $1,000 coming back to your church for the next several years.”
Fortunately, because we are part of a connectional church and you have people at the General Board of Pension and annual conference working on your side, we hope that we can make this a little easier for you. You may refer to this cover letter and these directions for typical NC churches in completing the required forms. The IRS Form 8941 and Form 990T will be needed for these filings. The General Board has created frequently asked questions documents (Part I & Part II) to address questions raised by annual conferences about practical implications of the Small Business Health Care Tax Credit (part of the 2010 health care reform legislation).
For questions, contact the General Board of Pension and Health Benefits at firstname.lastname@example.org. Or visit the General Board’s Health Care Reform webpage. The NC Annual Conference and the General Board do not provide legal or tax advice, but rather has provided this explanatory and illustrative information to help United Methodist local churches understand and benefit from the Tax Credit where possible.