Northwest Small Credit Unions Encouraged to Apply for the Small Business Health Care Tax Credit

Past recipients report receiving thousands of dollars in refunds; qualifying small credit unions must file by May 15 deadline.

4/2/2019

Hand holding the word "compliance."Northwest small credit unions are encouraged to apply for the Small Business Health Care Tax Credit. The tax credit was introduced in 2010, but only a few credit unions have taken advantage of the program.

“Based on head counts, over 100 Northwest credit unions may qualify for this tax credit,” said Northwest Credit Union Association Director of Compliance Services, David Curtis. “And receiving a tax credit could go a long way if resources are limited.”

The filing deadline to claim the 2018 tax year Small Business Health Care Tax Credit is May 15. According to Northwest credit union leader, Debie Keesee, President and CEO of Washington’s Spokane Media Federal Credit Union, a little time and effort is all that is needed.

“Credit unions only have to do a few parts of the 990T and fill out Form 8941; neither form is complex and only take a little time,” said Keesee. “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 employees for the tax year. And third, the credit union must pay an average of less than $53,000 per FTE.

The current maximum credit of 35 percent of insurance premiums paid 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 revised Form 990-T.

Credit unions that may be eligible should seek detailed information from their accountants or tax advisors. To learn more about this credit, check out the “Small Business Health Care Tax Credit: Detailed Analysis” that is available in the tax issues channel of InfoSight.

InfoSight also offers background on the credit, an easy formula to determine if your credit union is eligible, and links to the various IRS forms. More information is available from the IRS regarding the Small Business Health Care Tax Credit for Small Employers at IRS.gov.

Question of the Week

Q. A member recently died and when the executor of the estate came to claim the funds, we discovered that the member had an old girlfriend (dating back to 1975) listed as the Payable on Death (POD). Is the POD or the executor entitled to the funds?

A. The POD is entitled to the funds. Unfortunately, members often forget to change their account card PODs when circumstances change. The executor and/or family members, especially a spouse, of the deceased are entitled to take the issue to court. However, that is an outside issue and the credit union is still required to give funds to the POD.

Legal Briefs

National Credit Union Administration (NCUA)
NCUA issued additional information on the $160.1 million Share Insurance Fund dividend that will be paid to eligible institutions in the second quarter of 2019. NCUA also opened registration for an April 11 CECL webinar.

Consumer Financial Protection Bureau (CFPB)
CFPB published the Modified Loan Application Registers (LARs) and released the 2018 Consumer Response annual report.

U.S. Department of Labor (DOL)
DOL issued a proposal to update the regular rate regulations requirements that define what forms of payment employers include and exclude from the time and one-half calculation when determining workers’ overtime rates.

Internal Revenue Service (IRS) 
The IRS has revised the EIN application process as part of its ongoing security review.

Office of Foreign Assets Control (OFAC)
OFAC has updated the SDN list as of March 26. The last update prior to this was March 22.

Questions? Contact the Compliance Hotline: 1.800.546.4465, [email protected].