You can generally calculate your FTEs by adding up the hours 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).
Count both the time your employees worked for you and for the time that you paid (and were supposed to pay) them for time off, such as vacation, holidays, illness, incapacity (including disability), layoff, jury duty, military duty, or leave of absence.
Also, if any of your employees took more than 160 hours of continuous paid time off (as described above) you only need to count the first 160 hours. If your employees have more than 2,080 hours, only count the first 2,080.
You can count your employees' time by one of three methods:
Your credit will begin to phase out if you have more than 10 FTEs and will fall to zero if you have 25 or more.
Generally, all employees who perform services for you during the tax year are taken into account in determining your FTEs.
However, certain types of employees receive special treatment and some are not counted at all.
If you have employees that fall into any of the categories discussed, see the Instructions for Form 8941 for how to account for them.
If you employ people from a leasing organization, premiums paid by the organization are not counted when computing your credit. Under certain circumstances, leased employees count only partially or not at all.
If you have seasonal employees who work for you 120 days out of the year or fewer, they are not included when calculating your FTEs. However, the premiums you pay for their insurance coverage count in computing your credit.
If you are a sole proprietor, these employees are included with your business employees when computing the credit.
If you employ ministers and they are considered employees under the common-law test for determining worker status, they are included in calculating your FTEs.
Certain types of employees are not considered employees for purposes of the credit. When calculating your FTEs, do not include: