The Internal Revenue Service just cleared up one COBRA-subsidy issue that had some employers confused: the proper reporting procedures.
Under the American Recovery and Reinvestment Act of 2009, most employers report the 65% subsidy for COBRA continuation health insurance premiums, and most do so on Form 941. However, IRS just clarified in its Q&A (question FP-1) that certain companies not required to file a 941 still must report this data elsewhere. Specifically:
- Small employers that file Form 944, Employer’s Annual Federal Tax Return – generally those with an estimated employment tax liability of $1,000 or less in the calendar year – may claim their COBRA credit on Form 944 (line 11a), and
- Agricultural employers may claim the COBRA credit on Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees (line13a).
Employees who are involuntarily terminated between 9/1/09 and 2/28/10 may receive these subsidies for up to 15 months (previously nine months).
You’ll find more COBRA questions and answers here.