How does Zenefits support the COBRA Premium Assistance credit as part of the American Rescue Plan Act?
Currently, employers are able to claim credit for the COBRA Premiums if they are entered into Zenefits payroll as qualified health expenses. The credit is applicable for the purposes of an employer claiming Employee Retention Credits (COVID-19 Employee Retention - Qualified Health Plan Expenses contribution type) for any taxable period through December 31, 2021.
The ability to claim the full COBRA premium credit amount available via Employee Retention Credits may be limited through the eligible expense limitations and caps that are applicable to the Employee Retention Credit. Employers should review the IRS instructions and consult with their tax advisor to determine whether claiming credit for COBRA premiums paid by employer is appropriate for them.
In addition to claiming the COBRA premium credit through the Employee Retention Credit under the CARES Act, Zenefits has also created a new employer contribution pay type specifically for the new COBRA Premium Assistance Credit authorized under the American Rescue Plan Act (ARPA). This new contribution pay type is called COVID-19 COBRA Premium Assistance. Contributions entered in this new pay type will allow the COBRA Premium Assistance credit to be calculated correctly and reported on the IRS form 941.
There is no cap to the amount of qualifying premiums that may be entered under this credit.
Any COBRA premium entries made via the existing COVID-19 Employee Retention - Qualified Health Plan Expenses contribution type will be reported as part of the aggregate Employee Retention Credit claimed on an employer’s Form 941, and will not be reported separately. The new contribution type for the COBRA Premium Assistance Credit will be reported as a separate line item on an employer’s Form 941.
Employers should consult with their tax advisor on which credit is appropriate for their needs. Employers remain responsible for any related record-keeping required by the IRS for audit purposes.
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