Does my church qualify for a small-business tax credit?

March 04, 2011

The Patient Protection and Affordable Care Act, the health care reform bill passed in 2010, provides a tax credit to small businesses for health insurance premiums paid. Many Minnesota United Methodist churches may qualify for the tax credit, even though churches are tax-exempt organizations. Each church should make the calculations to see if it qualifies.

Documents on the General Board of Pension and Health Benefits web site will help with this process. From, look under “Health Care Reform—Small Business Tax Credit for Churches.”

These PDF documents include links to Internal Revenue Service forms and instructions, walking you through the IRS forms line by line. The deadline for filing is May 15, 2011, for employers with a fiscal year ending December 31, 2010.

The calculations and forms may be confusing. Your treasurer or bookkeeper or a volunteer may wish to contact other churches in the community and work through the instructions and forms together. If you read and follow the guidance from the General Board, you will be able to do this.

The following information may help:

  • The MAC Plan is a self-funded health plan and premiums paid to it are eligible for the tax credit.
  • The tax credit is prorated with smaller entities receiving a larger percentage of credit on their payments.
  • The Minnesota average premium for the small market group for the 2010 taxable year as determined by Health and Human Services is $4,704 for single coverage and $11,938 for family coverage.
  • Use your church’s EIN (Employer Identification Number) and the UMC’s group exemption number, 2573, on the appropriate lines.

For more complicated situations (e.g. church sponsored daycare or school) or if you have questions, please consult with your tax adviser. This article is not legal or tax advice but provides general information about the tax credit and encouragement to see if your church qualifies.

Barbara Carroll is director of finance and administration for the Minnesota Annual Conference of the United Methodist Church.

Minnesota Annual Conference of the United Methodist Church

122 West Franklin Avenue, Suite 400 Minneapolis, MN 55404

(612) 870-0058