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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
Excluded employees. The following individuals aren’t
considered employees when you figure this credit. Hours
and wages of these employees and premiums paid for
them aren’t counted when you figure your credit.
•
The owner of a sole proprietorship.
•
A partner in a partnership.
•
A shareholder who owns (after applying the section 318
constructive ownership rules) more than 2% of an S
corporation.
•
A shareholder who owns (after applying the section 318
constructive ownership rules) more than 5% of the
outstanding stock or stock possessing more than 5% of
the total combined voting power of all stock of a
corporation that isn’t an S corporation.
•
A person who owns more than 5% of the capital or
profits interest in any other business that isn’t a
corporation.
•
Family members or a member of the household who
isn’t a family member but qualifies as a dependent on the
individual income tax return of a person listed above.
Family members include a child (or descendant of a
child), a sibling or step-sibling, a parent (or ancestor of a
parent), a step-parent, a niece or nephew, an aunt or
uncle, or a son-in-law, daughter-in-law, father-in-law,
mother-in-law, brother-in-law, or sister-in-law. A spouse of
any owner or family member listed above is also
considered a family member for this purpose.
Former employees. Premiums paid on behalf of a
former employee with no hours of service may be treated
as paid on behalf of an employee for purposes of figuring
the credit, provided that, if so treated, the former
employee is also treated as an employee for purposes of
the uniform percentage requirement.
Leased employees. Don’t use premiums paid by the
leasing organization to figure your credit. Also, a leased
employee who isn’t a common law employee is
considered an employee for credit purposes if the
employee does all the following.
•
Provides services to you under an agreement between
you and a leasing organization.
•
Has performed services for you (or for you and a related
person) substantially full time for at least 1 year.
•
Performs services under your primary direction or
control.
But don’t use hours, wages, or premiums paid with
respect to the initial year of service on which leased
employee status is based.
Seasonal employees. Employees who perform labor or
services on a seasonal basis and perform labor or
services for you 120 or fewer days during the tax year
aren’t considered employees in determining FTEs and
average annual wages. But premiums paid on their behalf
are counted in determining the amount of the credit.
Seasonal workers include retail workers employed
exclusively during holiday seasons. Seasonal workers
also include workers employed exclusively during the
summer.
Household and other nonbusiness employees.
Household employees and other employees who aren’t
performing services in your trade or business are
considered employees if they otherwise qualify, as
discussed above. A sole proprietor must include both
business and nonbusiness employees to determine FTEs,
average annual wages, and premiums paid.
Ministers. A minister performing services in the exercise
of the minister’s ministry is treated as self-employed for
social security and Medicare purposes. However, for
credit purposes, whether a minister is an employee or
self-employed is determined under the common law test
for determining worker status. Self-employed ministers
aren’t considered employees.
Column (b), Employee Hours of
Service
Enter the total hours of service for the tax year for each
employee listed in column (a). Don’t enter more than
2,080 hours for any employee. But enter -0- for seasonal
employees who worked 120 or fewer days during the tax
year.
Employee hours of service. An employee’s hours of
service for a year include the following.
•
Each hour for which the employee is paid, or entitled to
payment, for the performance of duties for the employer
during the employer’s tax year.
•
Each hour for which an employee is paid, or entitled to
payment, by the employer on account of a period of time
during the employer’s tax year during which no duties are
performed due to vacation, holiday, illness, incapacity
(including disability), layoff, jury duty, military duty, or leave
of absence (except that no more than 160 hours of service
are required to be counted for an employee on account of
any single continuous period during which the employee
performs no duties).
To figure the total number of hours of service you must
take into account for an employee for the year, you can
use any of the following methods.
Actual-hours-worked method. Determine actual
hours of service from records of hours worked and hours
for which payment is made or due (payment is made or
due for vacation, holiday, illness, incapacity, etc., as
described above).
Days-worked equivalency method. Use a
days-worked equivalency whereby the employee is
credited with 8 hours of service for each day for which the
employee would be required to be credited with at least 1
hour of service under the rules described above.
Weeks-worked equivalency method. Use a
weeks-worked equivalency whereby the employee is
credited with 40 hours of service for each week for which
the employee would be required to be credited with at
least 1 hour of service under the rules described above.
Column (c), Employee Wages Paid
Complete Worksheet 2 before you complete
column (c) of Worksheet 1. Do not complete
column (c) if Worksheet 2, line 3, is 25 or more.
Enter the total wages paid for the tax year for each
employee listed in column (a). But enter -0- for seasonal
employees who worked 120 or fewer days during the tax
year.
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Instructions for Form 8941 (2023)