In general, all employees who perform services for you during the tax year are taken into account in determining your FTEs, average annual wages, and premiums paid.
You can generally calculate your FTEs by adding up the hours of service for all of your employees and then dividing that by 2,080 (which is a full time employee - 40 hours a week at 52 weeks per year).
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.
Do not use premiums paid by the leasing organization to figure your credit. Also, a leased employee who is not a common law employee is considered an employee for credit purposes if he or she 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, and
- Performs services under your primary direction or control.
But do not use hours, wages, or premiums paid with respect to the initial year of service on which leased employee status is based.
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 are not 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 are not 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.
MinistersA minister performing services in the exercise of his or her 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 are not considered employees.