Instructions For Form 8845 - Indian Employment Credit

2015

Department of the Treasury

Internal Revenue Service

Instructions for Form 8845

Indian Employment Credit

Section references are to the Internal Revenue Code

documentation, if any, is issued as proof of enrollment

unless otherwise noted.

status. Examples of appropriate documentation will vary

from one tribe to another and may include a tribal

Future Developments

membership card, Certified Degree of Indian Blood

For the latest information about developments related to

(CDIB) card, or letter from the tribe or tribal enrollment

Form 8845 and its instructions, such as legislation

office. Employers should retain a copy of the proof of

enacted after they were published, go to

enrollment status provided by the employee.

form8845.

2. Substantially all the services performed by the

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employee for the employer are performed within an Indian

reservation (defined below).

The Indian employment credit was extended through tax

3. The employee's principal residence while

years beginning before 2017.

performing such services is on or near the reservation

where the services are performed.

General Instructions

However, the employee shall be treated as a qualified

Purpose of Form

employee for any tax year only if more than 50% of the

wages paid or incurred by the employer to the employee

Employers of American Indians who are qualified

during the tax year are for services performed in the

employees use Form 8845 to claim the Indian

employer's trade or business. Each member of a

employment credit.

controlled group must meet this requirement

Partnerships and S corporations must file this form to

independently. Also, see the instructions for lines 1 and 2.

claim the credit. All others are generally not required to

The following are not qualified employees.

complete or file this form if their only source for this credit

Any individual who bears any of the relationships

is a partnership, S corporation, estate, trust, or

described in sections 152(d)(2)(A) through 152(d)(2)(G)

cooperative. Instead, they can report this credit directly on

to, or is a dependent described in section 152(d)(2)(H) of,

Form 3800, General Business Credit. The following

the employer.

exceptions apply.

If the employer is a corporation, any individual who

You are an estate or trust and the source credit can be

bears any of the relationships described in sections

allocated to beneficiaries. For more details, see the

152(d)(2)(A) through 152(d)(2)(G) to, or is a dependent

instructions for Form 1041, Schedule K-1, box 13, code L.

described in section 152(d)(2)(H) of, an individual who

You are a cooperative and the source credit can or

owns (or is considered to own under section 267(c)) more

must be allocated to patrons. For more details, see the

than 50% in value of the outstanding stock of the

instructions for Form 1120-C, Schedule J, line 5c.

corporation.

Definitions

If the employer is an estate or trust, any individual who

is a grantor, beneficiary, or fiduciary of the estate or trust

Qualified wages means any wages paid or incurred by

(or a dependent, as described in section 152(d)(2)(H), of

an employer for services performed by an employee while

that individual), or any individual who is a relative, as

such employee is a qualified employee (see below). It

described in sections 152(d)(2)(A) through 152(d)(2)(G),

does not include wages attributable to services rendered

of the grantor, beneficiary, or fiduciary of the estate or

during the 2-year period beginning with the day the

trust.

employee starts work for the employer if any portion of

If the employer is other than a corporation, estate, or

such wages is used in figuring the work opportunity credit

trust, any individual who owns directly or indirectly more

on Form 5884. Wages has the same meaning given in

than 50% of the capital and profits interest, including

section 51.

constructive ownership, in the entity.

Qualified employee health insurance costs means

If the employer is a corporation, any person who owns

any amount paid or incurred by an employer for health

(or is considered to own under section 318) more than 5%

insurance coverage for an employee while the employee

of the outstanding or voting stock of the employer or, if not

is a qualified employee. Do not include amounts paid or

a corporate employer, more than 5% of the capital or

incurred for health insurance under a salary reduction

profits interest in the employer.

agreement.

Any individual who performs services involving the

Qualified employee means, for any tax period, any

conduct of Class I, II, or III gaming, as defined in section 4

employee who meets all three of the following tests.

of the Indian Gaming Regulatory Act, and any individual

performing any services in a building housing such

1. The employee is an enrolled member, or the

gaming activity.

spouse of an enrolled member, of an Indian tribe. Each

tribe determines who qualifies for enrollment and what

Jan 21, 2016

Cat. No. 66389C

Instructions For Form 8845 - Indian Employment Credit - 2015

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