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February 3, 2010

Timing of Taking the COBRA Subsidy Credit

The IRS issued an FAQ (Reporting and Disclosure, RD-6) relating to the timing of reporting credit for payment of the COBRA subsidy premium.  If a COBRA premium, subject to the COBRA subsidy, is paid in 2010 for coverage in 2009, the employer may claim the credit for the related premium subsidy on Form 941 for either:

  • The quarter in 2010 in which it receives the individual’s 35% premium payment; or
  • A later quarter in 2010.

If the employer chooses to reduce its tax liability during a quarter based on receipt of the individual’s 35% premium payment, the employer must claim the related credit on Form 941 in the same quarter as the payment is made.

 

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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