Filing Deadline for Small-Business Health Care Tax Credit is May 15

Credit unions should be aware that the filing deadline to claim a credit for the 2013 tax year Small-Business Health Care Tax Credit is Thursday, May 15.

In December 2010, the Internal Revenue Service 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. But one 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,” says Mark Freels, president and CEO of Teamsters Council #37 Federal Credit Union. “That’s easy money in my book.”

Debie Keesee, president and CEO of Spokane Media Federal Credit Union, would agree.

“Credit unions only have to do a few parts of the 990T and fill out Form 8941. Neither form is complex and it only takes a little time,” Keesee says. “We received $1,100 back from the IRS for less than 45 minutes of time to fill out the forms. Everyone would consider that well worth the time investment.”

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 for the 2014 tax year) 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. To file a claim for the credit, credit unions must complete IRS Form 8941 and fill out the newly revised Form 990-T, which adds line 44f.

“Based on head counts, more than 100 Northwest credit unions may qualify for this tax credit,” says David Curtis, the Northwest Credit Union Association’s director of compliance services. “Receiving a tax credit could go a long way when you have limited resources.”

Credit unions that think they may be eligible should seek detailed information from their accountants or tax advisors. More information is also available in “Small Business Health Care Tax Credit: Detailed Analysis,” which is available in the Tax Issues Channel of InfoSight. The InfoSight page contains some background on the credit, an easy formula to determine if your credit union is eligible, and links to the various IRS forms.

In addition, more information on the Small Business Health Care Tax Credit for Small Employers is also available from the IRS.

Question of the Week

When we are setting up an account for a member’s trust, how do we know who has access to the funds in the account?

When one of your members wants to open an account for a living trust (i.e. when a member brings a trust document in and wants you to open an account in accordance with the trust), have the member give you a copy of the trust document or certification of trust. Look at the document(s) to see who is listed as the trustee (or occasionally, as co-trustees). The trustee is the only person who has the right under the trust to access the funds in the account.

Although you should look at the trust document to determine who is listed as trustee, you should not try to answer questions that members may have about their trusts.

Sometimes members have questions about which Social Security number or taxpayer identification number to use for a trust account, what happens when the trustee passes away, or other questions that require interpretation of the trust document. When members ask these types of questions, they are asking you for legal advice and should be referred to an attorney.

Related Links:

Legal Briefs

National Credit Union Administration (NCUA)

The April 2014 edition of the NCUA Report is now available.

The NCUA has released a video that helps answer questions about the proposed Risk-Based Capital Rule.

The NCUA has published the agenda for the April 24 board meeting.

The NCUA announced that it will host a Financial Literacy Twitter Chat on April 23.

Consumer Financial Protection Bureau (CFPB)

The CFPB issued a proposal that would help clarify some of the requirements of the Remittance Transfer Rule and extend the exemption for disclosing fees charged by the recipient foreign institution.

The CFPB released a guide regarding the completion of the new TILA-RESPA Integrated Disclosures aimed at making it easier for financial institutions to understand the new forms, in preparation for the effective date.

Federal Reserve Board (FRB)

Federal Reserve Chair Janet Yellen delivered a speech at the Economic Club of New York discussing the current economic outlook, including jobs, inflation and the overall economic recovery.

The most recent meeting minutes of the FRB’s Federal Open Market Committee meeting have been published.

The April edition of FedFlash is now available.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of April 17. The last update prior to this was April 11.


Questions? Contact the Compliance Hotline: 1.800.546.4465,


Posted in Compliance News, Federal, NCUA.