Form 8845 - Indian Employment Credit - 2000 (Page 2 of 3) in pdf

Form 8845 (2000)

Page

General Instructions

individual), or any individual who is a relative, as described in

sections 152(a)(1) through 152(a)(8), of the grantor,

Section references are to the Inter nal Revenue Code unless

beneficiary, or fiduciary of the estate or trust.

otherwise noted.

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

any individual who owns directly or indirectly more than 50%

Purpose of Form

of the capital and profits interest, including constructive

ownership, in the entity.

Employers of American Indians who are qualified employees

● Any person who owns (or is considered to own under

(see Definitions) use Form 8845 to claim the Indian

employment credit.

section 318) more than 5% of the outstanding or voting

stock of the employer or, if not a corporate employer, more

In most cases, the credit is 20% of the excess of an

than 5% of the capital or profits interest in the employer.

employer’s current year qualified wages and qualified

● Any individual who performs services involving the conduct

employee health insurance costs over the sum of the

corresponding amounts paid or incurred during calendar year

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

1993 by the employer (or predecessor). For purposes of the

Indian Gaming Regulatory Act and any individual performing

credit, the total amount of qualified wages and costs may

any services in a building housing such gaming activity.

not exceed $20,000 for each employee.

Indian tribe means any Indian tribe, band, nation, pueblo,

or other organized group or community, including any Alaska

Definitions

Native village or regional or village corporation, as defined in,

or established under, the Alaska Native Claims Settlement

Qualified wages means any wages paid or incurred by an

Act, that is recognized as eligible for the special programs

employer for services performed by an employee while such

and services provided by the United States to Indians

employee is a qualified employee (see below). It does not

because of their status as Indians. See the Federal Register

include wages attributable to services rendered during the

dated March 13, 2000 (65 FR 13298), for the most recent

1-year period beginning with the day the employee starts

listing of federally recognized Indian tribes.

work for the employer if any portion of such wages is used in

figuring the work opportunity credit on Form 5884. Wages

Indian reservation means a reservation as defined in

has the same meaning given in section 51.

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

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

Qualified employee health insurance costs means any

amount paid or incurred by an employer for health insurance

Early Termination of Employee

to the extent such amount is attributable to coverage

provided to any employee while such employee is a qualified

Generally, if the employer terminates a qualified employee

employee. No amount paid or incurred for health insurance

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

under a salary reduction arrangement may be included.

following rules apply.

Qualified employee means, for any tax period, any

● No wages or qualified employee health insurance costs

employee of an employer if the employee meets all three of

may be taken into account for the tax year the employment

the following tests.

is terminated.

1. The employee is an enrolled member, or the spouse of

● Any credits allowed for prior tax years by reason of wages

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

paid or incurred by the employer to that employee must be

who qualifies for enrollment and what documentation, if any,

recaptured. Report the amount on the line for recapture

is issued as proof of enrollment status. Examples of

taxes on the income tax return and write “45A” to the left of

appropriate documentation will vary from one tribe to another

the entry. Also, any carryback or carryover of the credit is

and may include a tribal membership card, Certified Degree

adjusted.

of Indian Blood (CDIB) card, or letter from the tribe or tribal

These rules do not apply if:

enrollment office. Employers should retain a copy of the

● The employee voluntarily quits;

proof of enrollment status provided by the employee.

● The employee is terminated because of misconduct; or

2. Substantially all the services performed during that

● The employee becomes disabled. However, if the disability

period by the employee for the employer are performed

ends before the end of the first year of employment, the

within an Indian reservation (defined below).

employer must offer reemployment to the former employee.

3. The employee’s principal residence while performing

such services is on or near the reservation where the

An employee is not treated as terminated if the corporate

services are performed.

employer is acquired by another corporation covered under

the rules in section 381(a) and the employee continues to be

However, the employee shall be treated as a qualified

employed by the acquiring corporation. Nor is a mere change

employee for any tax year of the employer only if more than

in the form of conducting the trade or business treated as a

50% of the wages paid or incurred by the employer to the

termination if the employee continues to be employed in

employee during the year are for services performed in the

such trade or business and the taxpayer retains a substantial

employer’s trade or business. Each member of a controlled

interest in such trade or business.

group must meet this requirement independently.

The following are not qualified employees.

Specific Instructions

● Any individual who bears any of the relationships

Part I—Current Year Credit

described in sections 152(a)(1) through 152(a)(8) to, or is a

dependent described in section 152(a)(9) of, the employer.

Figure the current year credit for your trade or business on

● If the employer is a corporation, any individual who bears

lines 1 through 4. Skip lines 1 through 4 if you are claiming

any of the relationships described in sections 152(a)(1)

only a credit that was allocated to you from a pass-through

through 152(a)(8) to, or is a dependent described in section

entity. The following rules apply to lines 1 and 2.

152(a)(9) of, an individual who owns (or is considered to own

● An employee is not a qualified employee if the total

under section 267(c)) more than 50% in value of the

amount of wages paid or incurred by the employer to the

outstanding stock of the corporation.

employee (whether or not for services within an Indian

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

reservation) exceeds the amount determined at an annual

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

rate of $30,000. This wage limit may be adjusted for inflation

dependent, as described in section 152(a)(9), of that

for tax years beginning after 2000.

Form 8845 - Indian Employment Credit - 2000 Page 2

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