Small Credit Unions May be Leaving Money on the IRS Table

In December 2010, the Internal Revenue Service (IRS) released guidance on how small employers may be eligible to claim the new small-business health care tax credit starting with the 2010 tax year. The health care tax credit was created as part of the 2010 Affordable Care Act. Since the tax credit was introduced, only a few credit unions have taken advantage of the program.

Recently, however, a Northwest credit union received a check from the IRS for almost $7,000 for the 2011 tax year.

“Almost $7,000 from the IRS for filling out form 8941,” said Mark Freels, president and CEO of Teamsters Council #37 Federal Credit Union. “That’s easy money in my book.”

The tax credit is available only to smaller credit unions, and credit unions must meet certain requirements to qualify. First, the credit union must pay premiums for employee health insurance coverage under a qualified plan. Second, the credit union must have fewer than 25 full-time equivalent (FTE) employees for the tax year. And third, the credit union must pay an average of less than $50,000 per FTE.

The current maximum credit of 25 percent of insurance premiums paid, which will increase to 35 percent in 2014, will go to credit unions with 10 or fewer FTE and average annual wages of $25,000 or less. The calculation for the tax credit phases out as the credit unions’ FTE count and average salary increase.

Both state and federal credit unions may receive the refundable tax credit, which could mean the IRS sends the credit union a check in the mail. To file a claim for the credit, credit unions must complete the IRS form 8941 and fill out the newly revised Form 990-T, which adds line 44f.

“Based on head counts, over 100 Northwest credit unions may qualify for this tax credit,” said Northwest Credit Union Association (NWCUA) Director of Compliance Services David Curtis. “And receiving a tax credit could go a long ways when you have limited resources.”

Credit unions that think they may be eligible should seek detailed information from their accountants or tax advisors. In addition, more information is available from the IRS regarding Form 8941, Credit for Small Employer Health Insurance Premiums.


Questions? Contact the Compliance Hotline: 1.800.546.4465,

Posted in Around the NW, Compliance News, Events, NWCUA.