Instructions For Form 8845 - Indian Employment Credit

Indian tribe means any Indian tribe, band, nation,

The total amount of qualified wages and qualified

pueblo, or other organized group or community, including

employee health insurance costs for each qualified

any Alaska Native village or regional or village

employee for any tax year is limited to $20,000.

corporation, as defined in, or established under, the

For a short tax year, multiply the wages limit by the

Alaska Native Claims Settlement Act, that is recognized

number of days in the short tax year and divide the result

as eligible for the special programs and services provided

by 365.

by the United States to Indians because of their status as

Line 1

Indians. See the Federal Register dated October 1, 2010

(75 FR 60810), for the most recent listing of federally

Enter the total qualified wages and qualified employee

recognized Indian tribes.

health insurance costs paid or incurred for qualified

employees during the tax year. An employee is not a

Indian reservation means a reservation as defined in

qualified employee if the total amount of wages paid or

section 3(d) of the Indian Financing Act of 1974 or section

incurred by the employer to the employee during the tax

4(10) of the Indian Child Welfare Act of 1978.

year (whether or not for services within an Indian

Early Termination of Employee

reservation) exceeds $45,000.

Generally, if the employer terminates a qualified employee

Line 2

less than 1 year after the date of initial employment, the

Enter the total qualified wages and qualified employee

following rules apply.

health insurance costs paid or incurred by the employer

No wages or qualified employee health insurance costs

(or predecessor) for qualified employees during calendar

may be taken into account for the tax year the

year 1993 (as if section 45A had been in effect during

employment is terminated.

1993). If none, enter zero. For this purpose, an employee

Any credits allowed for prior tax years by reason of

is not a qualified employee if the total amount of wages

wages paid or incurred to that employee must be

paid or incurred by the employer to the employee during

recaptured. Include the recapture amount on the line for

calendar year 1993 (whether or not for services within an

recapture taxes on your income tax return. Also, any

Indian reservation) exceeds $30,000.

carryback or carryover of the credit must be adjusted.

Line 4

These rules do not apply if:

Generally, you must reduce the deductions on your return

The employee voluntarily quits,

for salaries and wages and health insurance costs by the

The employee is terminated because of misconduct, or

credit on line 4, even if you cannot take the full credit this

The employee becomes disabled. However, if the

year because of the tax liability limit. If you capitalized any

disability ends during the first year of employment, the

costs on which you figured the credit, reduce the amount

employer must offer reemployment to that employee.

capitalized by the credit attributable to these costs.

An employee is not treated as terminated if the

Line 5

corporate employer is acquired by another corporation

Enter total Indian employment credits from:

covered under the rules in section 381(a) and the

Schedule K-1 (Form 1065), Partner's Share of Income,

employee continues to be employed by the acquiring

Deductions, Credits, etc., box 15 (code P);

corporation. Nor is a mere change in the form of

Schedule K-1 (Form 1120S), Shareholder's Share of

conducting the trade or business treated as a termination

Income, Deductions, Credits, etc., box 13 (code P);

if the employee continues to be employed in such trade or

business and the taxpayer retains a substantial interest in

Schedule K-1 (Form 1041), Beneficiary's Share of

such trade or business.

Income, Deductions, Credits, etc., box 13 (code L); and

Form 1099-PATR, Taxable Distributions Received

Member of Controlled Group or

From Cooperatives, box 10, or other notice of credit

Business Under Common Control

allocation.

For purposes of figuring the credit, all members of a

Partnerships and S corporations must always report the

controlled group of corporations (as defined in section

above credits on line 5. Also, estates and trusts that can

52(a)) and all members of a group of businesses under

allocate the above credits to beneficiaries and

common control (as defined in section 52(b)), are treated

cooperatives that can allocate the above credits to

as a single employer. As a member, figure your credit

patrons must always report these credits on line 5. All

based on your proportionate share of qualified wages and

other filers figuring a separate credit on earlier lines must

qualified employee health insurance costs giving rise to

also report the above credits on line 5. All others not using

the group's Indian employment credit. Enter your share of

earlier lines to figure a separate credit can report the

the credit on line 4. Attach a statement showing how your

above credits directly on Form 3800, Part III, line 1g.

share of the credit was figured, and write “See Attached”

Line 7

next to the entry space for line 4.

Cooperatives. A cooperative described in section

Specific Instructions

1381(a) must allocate to its patrons the credit in excess of

its tax liability limit. Therefore, to figure the unused amount

of the credit allocated to patrons, the cooperative must

Figure the credit for your trade or business on lines 1

first figure its tax liability. While any excess is allocated to

through 4. The following rules apply for lines 1 and 2.

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Instructions for Form 8845 (2015)

Instructions For Form 8845 - Indian Employment Credit - 2015 Page 2

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