With the end-of-quarter approaching, remind Payroll that not taking proper credit on the Form 941 for any COBRA subsidy payments your company made could be costly.

Here’s why: The COBRA credit must be claimed during the tax year in which the subsidy was paid – not later, IRS officials reminded participants of a recent industry partners conference call. During year-end when Finance Departments are often at their craziest, tasks like this often drop off the to-do list.

Remember, too, that if taking the credit resulted in an overpayment, Payroll claims that amount on the 941’s line 12a – again, during the same calendar year the subsidy was paid. Then, that overpayment may either be:

• refunded, or

• carried forward to the following quarter, even if the subsequent quarter is in the following tax year.

Employers should refer to the updated Form 941 instructions before reporting their COBRA subsidy payments.

You’ll find more info here.

Tags: COBRA, Form 941, subsidy