The Internal Revenue Service has released a draft version of the form that small businesses and tax-exempt organizations will use to calculate the small-business health-care tax credit when they file income tax returns next year.

The IRS has posted the document, Form 8941, on its Web site, IRS.gov. Both small-business and tax-exempt organizations will use the form to calculate the credit. A small business then will include the amount of the credit as part of the general business credit on its income tax return. Tax-exempt organizations must claim the small-business health-care tax credit on a revised Form 990-T, which they currently use to report and pay the tax on unrelated business income. Form 990-T will be revised for the 2011 filing season to enable eligible organizations—even if they don't owe any tax on unrelated business income—to claim the health-care tax credit, the IRS says.

The final version of Form 8941 and its instructions will be available later this year.

The small-business health-care tax credit was included in the health-reform act signed into law last March. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

For 2010, the credit generally is available to small employers that contribute an amount equivalent to at least half the cost of single coverage in a health-care plan for their employees. The maximum credit for businesses is 35 percent of the premium amount they pay, and the maximum for tax-exempt employers is 25 percent of the premium. Beginning in 2014, the maximum goes up to 50 percent of the premium for businesses and 35 percent for tax-exempt organizations.

The maximum credit goes to smaller employers—those with 10 or fewer full-time-equivalent employees—paying average wages of $25,000 or less. The credit is completely phased out for employers that have 25 FTEs or more or that pay average wages of $50,000 per year or more. Because the eligibility rules are based in part on the number of FTEs, and not simply the number of employees, businesses that use part-time help may qualify even if they employ more than 25 individuals, the IRS says.