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Form 8941 CPA gives tips on 2012 Preparation

Form 8941 CPA 2013

Gary Bode, CPA: I think of Form 8941 as part of the company’s tax return. Here’s some pointers. (910) 399-2705.

Form 8941 CPAs aren’t shocked to find only a draft version of the Credit for Small Employer Health Insurance Premiums as of the end of November. The previous year’s version was finalized in January! The draft is probably close enough to the final version of Form 8941 to discuss it. Note the 2012 Form 8941 instructions aren’t posted yet. But here are pointers and FAQs I’ve encountered during the last two years.

How am I a Form 8941 CPA?

I prepare lots of small business tax returns and prepare Form 8941 as part of it.

How do I get the information to complete Form 8941 for a company?

Most of it comes from the company payroll records for the year. But I often get clarification from the owners, members, shareholders, partners etc.

Is Form 8941 too complicated to self-prepare?

Not really. In most cases CPAs earns their keep during the tax preparation process. Rumor has it that companies, who self-prepare their taxes, error on the side of less tax. But my experience is the opposite; self-prepared business taxes pay too much tax. And raise red flags for IRS audits too in other parts of the return. Pay close attention to the IRS instructions. The first time is always the hardest. Form 8941 covers a wide array of circumstances and once you understand your company’s specifics they seldom change.

Is the Credit for Small Employer Health Insurance Premiums worth the hassle of preparing Form 8941?

CPA chatter says that companies find the actual tax reduction too small and Form 8941 too complicated to bother with. In my experience, the small extra fee for Form 8941 warrants submitting it. I think not submitting it raises a red flag, but that’s just my opinion. Form 8941 does come off sometimes as “weasely”. For example, Line 7 of the 2012 draft version of Form 8941 uses a 35% credit. But that 35% gets succesively whittled down as you progress through completion of Form 8941.

What are excluded workers?

Generally anyone that can be construed as an owner. Why? Probably to prevent the type of top-heavy tax positioning common in pension plans. Check the Form 8941 instructions.

What’s a FTE?

One Full Time Equivalent equals 2080 hours of labor by included workers. So let’s say you have three employees, one full-time and two part-time. The full-time employee works 2080 hours in 2012 and the two part-time employees work 1040 hours each. The number of FTE = (2080 + 1040 + 1040) / 2080 = 2 FTE.

How does the average wage factor in?

Last year limitations on the Form 8941 credit kicked in at an average payroll rate of $25,000 per FTE. Another example of the process potentially appearing weasely.

I’m a CPA with a virtual office to serve your company wherever it is. I’m a Form 8941 CPA because I prepare business tax returns. Most companies have a CPA. But if your’s doesn’t, consider giving us a call. (910) 399-2705.


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