Fillable Form 8844 - Empowerment Zone Employment Credit

Form 8844 (2001)

Page

● The employee is terminated because of misconduct

Line 2

as determined under the applicable state

In general, you must reduce your deduction on your

unemployment compensation law.

return for salaries and wages and certain educational

● The employee becomes disabled before the 90th

and training costs by the line 2 credit amount. You

day. However, if the disability ends before the 90th

must make this reduction even if you cannot take the

day, the employer must offer to reemploy the former

full credit this year because of the tax liability limit. If

employee.

you capitalized any costs on which you figured the

credit, reduce the amount capitalized by the amount of

An employee is not treated as terminated if the

the credit attributable to these costs.

corporate employer is acquired by another corporation

under section 381(a) and the employee continues to be

Members of a controlled group of corporations and

employed by the acquiring corporation. Nor is a mere

businesses under common control are treated as a

change in the form of conducting the trade or business

single employer in determining the credit. The

treated as a termination if the employee continues to

members share the credit in the same proportion that

be employed in such trade or business and the

they paid or incurred qualifying wages.

taxpayer retains a substantial interest therein.

Line 5

Enter the amount included on line 4 that is from a

Specific Instructions

passive activity. Generally, a passive activity is a trade

Complete lines 1 and 2 to figure the current year credit

or business in which you did not materially participate.

for your trade or business. Skip lines 1 and 2 if you are

Rental activities are generally considered passive

claiming only a credit that was allocated to you from a

activities, whether or not you materially participate. For

flow-through entity.

details, see Form 8582-CR, Passive Activity Credit

Limitations (for individuals, trusts, and estates), or

Line 1

Form 8810, Corporate Passive Activity Loss and Credit

Enter the total qualified zone wages paid or incurred

Limitations (for corporations).

during calendar year 2001.

Line 7

Qualified zone wages are wages paid or incurred

Enter the passive activity credit allowed for the 2001

by an employer for services performed by an employee

EZE credit from Form 8582-CR or Form 8810. See the

while the employee is a qualified zone employee

instructions for the applicable form for details.

(defined earlier). Wages have the same meaning as

given in section 51, and are generally defined as those

Line 8

wages subject to the Federal Unemployment Tax Act

Enter the amount of the EZE credit you carried forward

without regard to the dollar limitation.

from 2000.

For each qualified zone employee, the amount of

qualified zone wages that may be taken into account

Line 9

for a calendar year is limited to the first $15,000.

Use only if you amend your 2001 return to carry back

Wages do not include any amount taken into account

an unused EZE credit from 2002.

in figuring the work opportunity credit on Form 5884.

The $15,000 limit is reduced by the amount of wages

Line 10

paid or incurred during the year that are used in

If line 10 is zero, skip Part II.

figuring the work opportunity credit for that employee.

Pass-through entities allocate the credit as follows.

The following are also treated as wages paid to an

employee.

S corporations and partnerships. Allocate the line 10

● Amounts paid or incurred by the employer as

credit among the shareholders or partners. Attach

Form 8844 to the return and show the credit for each

educational assistance payments excludable from the

shareholder or partner on Schedule K-1. Electing large

employee’s gross income under section 127, but only if

partnerships, include this credit in “general credits.”

paid or incurred to a person who is not related to the

employer. For this purpose, a person is related to the

Estates and trusts. The line 10 credit is allocated

employer only if that person has a relationship to the

between the estate or trust and the beneficiaries in

employer described in section 267(b) or 707(b)(1)

proportion to the income allocable to each. On the

(substituting “10 percent” where “50 percent” appears

dotted line to the left of the amount on line 10, the

in these sections), or the employer and that person are

estate or trust should enter its part of the total credit.

engaged in trades or businesses under common

Label it “1041 Portion” and use this amount in Part II

control (within the meaning of subsections (a) and (b)

to figure the credit to claim on Form 1041, U.S.

of section 52).

Income Tax Return for Estates and Trusts.

● Amounts paid or incurred by the employer on behalf

Cooperatives. Most tax-exempt organizations cannot

of an employee under age 19 for a youth training

take the EZE credit, but a cooperative described in

program operated by that employer in conjunction with

section 1381(a) takes the credit to the extent of its tax

local education officials.

liability. Allocate the credit in excess of the tax liability

limit to the patrons of the cooperative.

Form 8844 - Empowerment Zone Employment Credit - 2001 Page 3

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