Discussion:New Health Care Credit for S-corp Owners
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Discussion Forum Index --> Tax Questions --> New Health Care Credit for S-corp Owners
18 January 2011 | |
| I am trying to figure out the answer to where an S-corp shareholder claims the new health care credit on his personal return. I know his premiums do not count towards the credit calculation; that is not my question.
When I calculate the credit on Form 8941 on the 1120S, the credit goes on the K-1, line 13, code P. However, where does the shareholder/owner get the tax credit on the 1040? It would seem unfair to eliminate the credit entirely for S-corporations. I called IRS and they told me they could not answer the question until after January 26, when the K-1 is final. My only guess would be Line 53 on the 1040...but if you have anything on that line, you cannot e-file the return. The fact that there is no clear guidance on this issue is baffling to me. No one seems to know. I'm hoping all you smart people know the answer. Maybe Form 3800? If you look at Form 8941, line 16, it says, "Partnerships and S-corporations stop here and report this figure on Schedule K. All others ..." | |
| 18 January 2011 | |
| My understanding is that this will be reported on Form 3800. | |
Nightsnorkeler (talk|edits) said: | 18 January 2011 |
| Agree with Captcook, form 3800 line 29h, unless they change the form before it is approved. | |
Death&Taxes (talk|edits) said: | 19 January 2011 |
| This was covered in the seminar I attended, and the form 8941 is part of the software package. I sent the one client I have that might qualify some information on it. | |
Michaelstar (talk|edits) said: | 19 January 2011 |
| Do not the instructions to this form specifically excluded greater than 2% S-Corporation s/h's? That is how I read it. | |
Death&Taxes (talk|edits) said: | 19 January 2011 |
| That is true, Michael, but if the S pays for certain amounts of non-2% employee health insurance, they can get the credit. | |
Michaelstar (talk|edits) said: | 19 January 2011 |
| Thank you David for dialing me in. Agree now with the info above with that in mind. | |
| 19 January 2011 | |
| I do know that this credit is for the 2010 tax year. I have already completed Form 8941 and the credit flows onto the K-1, line 13, code P (as I said above). It just doesn't make sense that the IRS doesn't even know where to claim this flow-through item on a 1040. (Oh, yeah, it's the IRS.) If it is going to go on Form 3800, does anyone have a 2010 copy of that form? The only one posted on irs.gov is the 2009 form and my software (ProSeries) doesn't show a special line for that credit. In fact, when I import the K-1 into the 1040, there is a warning message that says:
Form 8941 HEALTH INSURANCE PREMIUMS CREDIT $798: This information was entered on the K-1 in the business return. However, ProSeries is unable to determine where this information belongs on the individual return. Evaluate this item in the S corporation return. If appropriate, manually enter the item in the individual return. I would imagine that Lacerte has the same warning. Also, if it is a 3800 item, I don't think it can be e-filed. Those of you have have S-corp owners with non-2% employees will find this to be a pain. | |
| 19 January 2011 | |
| Here's the draft form: 3800 draft, and after you open that up, if you take away everything from the last slash to the end, you can bookmark the link to the draft forms folder for future fun and games. | |
| 19 January 2011 | |
| Thanks Trillium. I forgot to check for a draft of the form, but it doesn't show up on there. Line 1a through 1bb does not have a description for the "Small Employer Health Insurance Premium Credit." I can only imagine that regardless of whether it flows through on Form 3800, I'm afraid that it will be on line 53 of the 1040, which means it can't be e-filed. I'm led to surmise that if line 16 says for S-corps to put the credit on Sch K (and K-1) it may very well go on Form 3800 because that's where it goes for cooperatives, estates and trusts, but I guess we'll find out after January 26. | |
Nightsnorkeler (talk|edits) said: | 19 January 2011 |
| As I stated earlier, the credit goes to line 29h of the 2010 3800. You won't find it on page one. | |
| 19 January 2011 | |
| @ Nightsnorkeler - Line 29h of Form 3800 says: "Enter the credit from Form 8941, line 21 or 23." However, if you are an S-corp (or partnership, I would imagine), you stop at line 16 on Form 8941. It says: "Stop here and report this amount on Schedule K." Therefore, an S-corp would not have anything on line 21 or 23 of Form 8941 and thus nothing on line 29h of Form 3800. Hence, the confusion for pass-through entities, assuming we follow the directions exactly as they read. Maybe I'm missing something here. You may very well be correct, but that's not what the instructions say. | |
| 19 January 2011 | |
| Looks like the S Corp shareholder amount goes from the K-1 to line 15 of the 8941, down through the rest of the form and then to Line 29h on Form 3800. | |
| 19 January 2011 | |
| That line is talking about the credit FROM an S-corp, not the S-corp itself. Line 16 (which is the line that tells S-corps to stop there, is the sum of line 15 and line 12. Line 16 is the last line for S-corps to fill out. | |
| 19 January 2011 | |
| Correct, from line 16 to Schedule K-1, from Schedule K-1 to line 15 of the shareholders Form 8941, then to shareholder's Form 3800. | |
| 19 January 2011 | |
| So, what you're saying is that the S-corp completes Form 8941 and then the shareholder fills out form 8941, going to 3800/29h ? Seems like a reasonable assumption. However, how many s-corps and partnerships who have 2% or more owners are there who will now not be able to e-file? Or is that just ProSeries that can't e-file Form 3800? Nobody said life was fair. | |
| 19 January 2011 | |
| Don't know about ProSeries. Last year ProSystemFx allowed some forms that could not be filed directly to be attached to the efile as a PDF. | |
| 19 January 2011 | |
| Maybe it can be e-filed. I just recall that if you had anything on line 53 of the 1040, it couldn't be e-filed. I'll have to check on that. Thanks for your help, Lckent. I knew that if the IRS was stumped, someone on this forum could answer the question. | |
Hermie2000 (talk|edits) said: | 1 February 2011 |
| TaxSense, now that we are in February, were you able to get the credit to flow to the 1040? I have three clients that will more than likely qualify for the credit and would like to know how you finally resolved it. Great question and feedback everybody! Thanks! | |
Nightsnorkeler (talk|edits) said: | 1 February 2011 |
| TaxSense got it in the second to last post: S-corp prepares form 8941, credit goes on K-1. Shareholder prepares form 8941 using credit from K-1, then it flows to the 3800. 3800's still aren't approved yet, but you get the idea. | |
| 1 February 2011 | |
| Yes, that is the way it goes...at this point, at least ProSeries still doesn't know what to do with the credit, but probably the next update it will be in there. You can manually enter it on the individual shareholder's 1040 by filling out the 8941 on line 15 which flows to 3800 line 29h and then to the 1040 on line 53. | |
11 March 2011 | |
| Facts: S-corp - 21 EE's including 1 - Officer
Following Premiums pd: 6 - pay more than 50% premium So out of 20 elgible EE's, 6 are covered. Do these 6 qualify for Form 8941 credit, assuming they meet the average wage requirement and qualified plan. My understanding, it has to a 50% of UNIFORM coverage rather than by EA EE...however I believe it does not applied to 2010. Thanks for your time. | |
| 11 March 2011 | |
| Dude, there was a recent discussion about the meaning of the word "uniform" and what applies when in this discussion: Discussion:Small Employer Health Insurance Credit; might could be that it could help you. | |
