8844 Empowerment Zone and Renewal Community Employment Credit

2007 Form 8844, Empowerment Zone and Renewal Community Employment
Credit
Purpose:

This is the first circulated draft of the 2007 Form 8844. Please see
below for a description of major changes.

TPCC Meeting: No TPCC Meeting scheduled, but one may be arranged if
requested.
Prior Revisions: The 2006 Form 8844 may be accessed at:
http://www.irs.gov/pub/irs-pdf/f8844.pdf
Other products: Circulations of draft tax forms and instructions are posted at
http://taxforms.web.irs.gov/draft_products.html. Draft publications are
not available.
Comments:

Please email, fax, call or mail any comments by June 22, 2007, to me
and email the form’s reviewer, Sharon Dewsbury, at
[email protected].

Lisa Hysek
Tax Law Specialist
SE:W:CAR:MP:T:B
NCFB C7-441
Phone: 202-283-7359
Email: [email protected]

Major Changes to the 2007 Form 8844, Empowerment Zone and Renewal
Community Employment Credit
•

Updated the tax year references on the form and instructions.

•

Under Part II, Allowable Credit
o Lines13 and 26, reference to Form 1120-A was removed since the form is
obsolete.
o Lines16a and16b (representing the foreign tax credit and the personal tax credits
from Form 1040) are re-ordered due to the sunset of IRC section 26(a)(2).
o On Line 16a (old line 16b), the Form 1040 line references are changed to
conform to Work Request Notification (WRN) changes on the 2007 form.
o Line 16c is rewritten to reflect the American Samoa economic development credit
(PL 109-432 sec. 119(a)) and the pass-thru of the QEV credit. This line is
revised to read: Credits from Forms 5735 and 8834.
o Line 24 was changed to add a specific reference to Form 3800.

•

The instructions for Line 24 were deleted since they are no longer necessary.

2
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I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8844, PAGE 1 of 4
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 432mm (17") x 279mm (11") FOLD TO: 216 mm (81⁄ 2 ") x 279 mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

8844

Department of the Treasury
Internal Revenue Service

Action

Revised proofs
requested

Empowerment Zone and Renewal
Community Employment Credit
©

OMB No. 1545-1444

2007

Attachment
Sequence No.

Attach to your tax return.

Current Year Credit

Enter the total qualified wages paid or incurred during calendar year 2007 only (see instructions)
Qualified empowerment zone wages
$
X 20% (.20)
Qualified renewal community wages
$
X 15% (.15)
Add lines 1a and 1b. You must subtract this amount from your deduction for salaries and wages

1a
1b

3

Employment zone and renewable community employment credit from parterships, S corporations,
cooperatives, estates, and trusts

3

Add lines 2 and 3. Partnerships and S corporations, report this amount on Schedule K; all others, go
to line 5

4

Empowerment zone and renewal community employment credit included on line 4 from passive
activities (see instructions)
Subtract line 5 from line 4
Passive activity credit allowed for 2007 (see instructions)
Carryforward of empowerment zone and renewal community employment credit to 2007
Carryback of empowerment zone and renewal community employment credit from 2008 (see instructions)

5
6
7
8
9

5
6
7
8
9
10

Add lines 6 through 9. Cooperatives, estates, and trusts, go to line 11. All others, use this amount to
complete Part II
Amount allocated to the patrons of the cooperative or the beneficiaries of the estate or trust (see
instructions)
Cooperatives, estates, and trusts. Subtract line 11 from line 10. Use this amount to complete Part II

11
12

Part II
13

● Estates and trusts. Enter the sum of the amounts from Form 1041, Schedule G, lines 1a and
1b, or the amount from the applicable line of your return
Alternative minimum tax:
● Individuals. Enter the amount from Form 6251, line 35
● Corporations. Enter the amount from Form 4626, line 14
● Estates and trusts. Enter the amount from Form 1041, Schedule I, line 56
15 Add lines 13 and 14
16a Credits from Form 1040, lines 47 through 50 and lines 52 through 54 (or
Form 1040NR, lines 44, 45, and 47 through 49)

21
22
23
24
25
26

%
%

14

20

2

10
11
12

Allowable Credit

Regular tax before credits:
● Individuals. Enter the amount from Form 1040, line 44; Form 1040NR, line 41
● Corporations. Enter the amount from Form 1120, Schedule J, line 2; or the applicable line of
your return

b
c
d
e
f
17
18
19

99

Identifying number

1
a
b
2

4

Signature

O.K. to print

Name(s) shown on return

Part I

Date

16a
16b
Foreign tax credit
16c
Credits from Forms 5735 and 8834
16d
Non-business alternative motor vehicle credit (Form 8910, line 18)
16e
Non-business alternative fuel vehicle refueling property credit (Form 8911, line 19)
Add lines 16a through 16e
Net income tax. Subtract line 16f from line 15. If zero, skip lines 18 through 24 and enter -0- on line 25
18
Net regular tax. Subtract line 16f from line 13. If zero or less, enter -019
Tentative minimum tax (see instructions)
Enter 25% (.25) of the excess, if any, of line 18 over $25,000 (see
20
instructions)
21
Multiply line 19 by 75% (.75)
Enter the greater of line 20 or line 21
Subtract line 22 from line 17. If zero or less, enter -0General business credit (Form 3800, line 19)
Subtract line 24 from line 23
Credit allowed for the current year. Cooperatives, estates, and trusts. Enter the smaller of line 12 or
line 25. Report this amount on Form 1041, Schedule G, line 2c; or Form 1120-C, Schedule J, line 5c. If
line 25 is smaller than line 12, see instructions. All others. Enter the smaller of line 10 or line 25. Report
this amount on Form 1040, line 55; Form 1040NR, line 50; Form 1120, Schedule J, line 5c; or the
applicable line of your return. If line 25 is smaller than line 12, see instructions

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 16145S

13

14
15

16f
17

22
23
24
25

26
Form 8844 (2007)

2
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8844, PAGE 2 of 4
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 432mm (17") x 279mm (11") FOLD TO: 216 mm (81⁄ 2 ") x 279 mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8844 (2007)

General Instructions
Section references are to the Internal
Revenue Code.

Purpose of Form
Use Form 8844 to claim the
empowerment zone and renewal
community employment (EZRCE) credit.
For tax years that include December 31,
2007, the credit is:
● 20% of the employer’s qualified
wages (up to $15,000) paid or incurred
during calendar year 2007 on behalf of
qualified empowerment zone employees
plus
● 15% of the employer’s qualified
wages (up to $10,000) paid or incurred
during calendar year 2007 on behalf of
qualified renewal community employees.
Although the credit is a component of
the general business credit, a special tax
liability limit applies. The allowable
credit, therefore, is figured on Form
8844 and is not carried to Form 3800,
General Business Credit.

Empowerment Zones
Urban areas. Parts of the following
urban areas are empowerment zones.
You can find out if your business or an
employee’s residence is located within
an urban empowerment zone by using
the RC/EZ/EC Address Locator at
www.hud.gov/crlocator or by calling
1-800-998-9999.
● Pulaski County, AR
● Tucson, AZ
● Fresno, CA
● Los Angeles, CA (city and county)
● Santa Ana, CA
● New Haven, CT
● Jacksonville, FL
● Miami/Dade County, FL
● Chicago, IL
● Gary/Hammond/East Chicago, IN
● Boston, MA
● Baltimore, MD
● Detroit, MI
● Minneapolis, MN
● St. Louis, MO/East St. Louis, IL
● Cumberland County, NJ
● New York, NY
● Syracuse, NY
● Yonkers, NY
● Cincinnati, OH
● Cleveland, OH
● Columbus, OH
● Oklahoma City, OK
● Philadelphia, PA/Camden, NJ
● Columbia/Sumter, SC

Page

● Knoxville, TN
● El Paso, TX
● San Antonio, TX
● Norfolk/Portsmouth, VA
● Huntington, WV/Ironton, OH
Washington, DC. Under section 1400,
parts of Washington, DC are treated as
an empowerment zone. For details, use
the RC/EZ/EC Address Locator at
www.hud.gov/crlocator or see Notice
98-57, on page 9 of Internal Revenue
Bulletin 1998-47 at
www.irs.gov/pub/irs-irbs/irb98-47.pdf.
Rural areas. Parts of the following rural
areas are empowerment zones. You can
find out if your business or an
employee’s residence is located within a
rural empowerment zone by using the
RC/EZ/EC Address Locator at
www.hud.gov/crlocator or by calling
1-800-998-9999.
● Desert Communities, CA (part of
Riverside County)
● Southwest Georgia United, GA (part of
Crisp County and all of Dooly County)
● Southernmost Illinois Delta, IL (parts
of Alexander and Johnson Counties and
all of Pulaski County)
● Kentucky Highlands, KY (part of
Wayne County and all of Clinton and
Jackson Counties)
● Aroostook County, ME (part of
Aroostook County)
● Mid-Delta, MS (parts of Bolivar,
Holmes, Humphreys, Leflore, Sunflower,
and Washington Counties)
● Griggs-Steele, ND (part of Griggs
County and all of Steele County)
● Oglala Sioux Tribe, SD (parts of
Jackson and Bennett Counties and all of
Shannon County)
● Middle Rio Grande FUTURO
Communities, TX (parts of Dimmit,
Maverick, Uvalde, and Zavala Counties)
● Rio Grande Valley, TX (parts of
Cameron, Hidalgo, Starr, and Willacy
Counties)
Qualified empowerment zone
employee. A qualified empowerment
zone employee is any employee
(full-time or part-time) of the employer
who:
● Performs substantially all of the
services for that employer within an
empowerment zone in the employer’s
trade or business and
● Has his or her principal residence
within that empowerment zone while
performing those services (employees
who work in the Washington, DC
empowerment zone may live anywhere
in the District of Columbia).

2

See Qualified Employees on page 3
for a list of persons who are not
qualified employees.

Renewal Communities
Parts of the following areas are renewal
communities. You can find out if your
business or an employee’s residence is
located within a renewal community by
using the RC/EZ/EC Address Locator at
www.hud.gov/crlocator or by calling
1-800-998-9999.
● Greene-Sumter County, AL
● Mobile County, AL
● Southern Alabama
● Los Angeles, CA
● Orange Cove, CA
● Parlier, CA
● San Diego, CA
● San Francisco, CA
● Atlanta, GA
● Chicago, IL
● Eastern Kentucky
● Central Louisiana
● New Orleans, LA
● Northern Louisiana
● Ouachita Parish, LA
● Lawrence, MA
● Lowell, MA
● Detroit, MI
● Flint, MI
● West Central Mississippi
● Turtle Mountain Band of Chippewa, ND
● Camden, NJ
● Newark, NJ
● Buffalo-Lackawanna, NY
● Jamestown, NY
● Niagara Falls, NY
● Rochester, NY
● Schenectady, NY
● Hamilton, OH
● Youngstown, OH
● Philadelphia, PA
● Charleston, SC
● Chattanooga, TN
● Memphis, TN
● Corpus Christi, TX
● El Paso County, TX
● Burlington, VT
● Tacoma, WA
● Yakima, WA
● Milwaukee, WI

2
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8844, PAGE 3 of 4
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 432mm (17") x 279mm (11") FOLD TO: 216 mm (81⁄ 2 ") x 279 mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8844 (2007)

Page

Qualified renewal community
employee. A qualified renewal
community employee is any employee
(full-time or part-time) of the employer
who:
● Performs substantially all of the
services for that employer within a
renewal community in the employer’s
trade or business and

● Any individual employed by the
employer in a trade or business for
which the principal activity is farming
(see Note below), but only if at the close
of the tax year the sum of the following
amounts exceeds $500,000.

● Has his or her principal residence
within that renewal community while
performing those services.
See Qualified Employees below for a
list of persons who are not qualified
employees.

2. The value of the farm assets leased
by the employer.

Qualified Employees
Any person may be a qualified employee
except the following.
● Any relative of the employer described
in sections 152(d)(2)(A) through
152(d)(2)(G).
● A dependent of the employer
described in section 152(d)(2)(H).
● If the employer is a corporation, any
individual who bears any of the
relationships described in sections
152(d)(2)(A) through 152(d)(2)(G), or is a
dependent described in section
152(d)(2)(H), of an individual who owns
(or is considered to own under section
267(c)) more than 50% in value of the
outstanding stock of the corporation.
● If the employer is an entity other than
a corporation, any individual who owns
directly or indirectly more than 50% of
the capital and profits interest, including
constructive ownership, in the entity.
● If the employer is an estate or trust,
any individual who is a grantor,
beneficiary, or fiduciary of the estate or
trust (or a dependent, as described in
section 152(d)(2)(H), of such an
individual), or any individual who is a
relative, as described in sections
152(d)(2)(A) through 152(d)(2)(G), of the
grantor, beneficiary, or fiduciary of the
estate or trust.
● Any person who owns (or is
considered to own under section 318)
more than 5% of the outstanding or
voting stock of the employer, or if not a
corporate employer, more than 5% of
the capital or profits interest in the
employer.
● Any individual employed by the
employer for less than 90 days. For
exceptions, see Early termination of
employee below.
● Any individual employed by the
employer at any private or commercial
golf course, country club, massage
parlor, hot tub facility, suntan facility,
racetrack or other facility used for
gambling, or any store the principal
business of which is the sale of alcoholic
beverages for consumption off premises.

1. The larger of the unadjusted bases
or fair market value of the farm assets
owned by the employer.

Note. Certain farming activities
described in section 2032A(e)(5)(A) or (B).
Early termination of employee.
Generally, an individual is not a qualified
zone employee unless employed for at
least 90 days. The 90-day requirement
does not apply in the following
situations.
● The employee is terminated because
of misconduct as determined under the
applicable state unemployment
compensation law.
● The employee becomes disabled
before the 90th day. However, if the
disability ends before the 90th day, the
employer must offer to reemploy the
former employee.
An employee is not treated as
terminated if the corporate employer is
acquired by another corporation under
section 381(a) and the employee
continues to be employed by the
acquiring corporation. Nor is a mere
change in the form of conducting the
trade or business treated as a
termination if the employee continues to
be employed in such trade or business
and the taxpayer retains a substantial
interest therein.

Wages
Wages are defined in section 51(c) and
generally are wages (excluding tips)
subject to the Federal Unemployment
Tax Act (FUTA), without regard to the
FUTA dollar limitation. The following are
also treated as wages.
● Amounts paid or incurred by the
employer as educational assistance
payments excludable from the
employee’s gross income under section
127. However, this does not apply if the
employee has a relationship to the
employer described in section 267(b) or
707(b)(1) (substituting "10 percent" for
"50 percent" in those sections) or the
employer and employee are engaged in
trades or businesses under common
control (within the meaning of sections
52(a) and (b)).
● Amounts paid or incurred by the
employer on behalf of an employee
under age 19 for a youth training
program operated by that employer in
conjunction with local education officials.

3

Specific Instructions
Complete lines 1 and 2 to figure the
current year credit for your trade or
business. Skip lines 1 and 2 if you are
only claiming a credit that was allocated
to you from a pass-through entity.

Line 1a—Qualified Empowerment
Zone Wages
Enter the total qualified empowerment
zone wages paid or incurred during
calendar year 2007. The credit must be
figured using only the wages that you
paid or incurred in the calendar year that
ended with or within your tax year. For
example, if your tax year began on April
1, 2007, and ended on March 31, 2008,
you must figure wages based on the
calendar year that began on January 1,
2007, and ended on December 31,
2007. Wages paid after the end of the
calendar year may be used only to figure
the credit claimed on the following
year’s tax return.
Qualified empowerment zone wages
are qualified wages paid or incurred by
an employer for services performed by
an employee while the employee is a
qualified empowerment zone employee
(defined earlier). The maximum wages
that may be taken into account for each
employee is limited to $15,000. The
$15,000 amount for any employee is
reduced by the amount of wages paid or
incurred during the calendar year on
behalf of that employee that are used in
figuring:
● The work opportunity credit (Form
5884) or
● The welfare-to-work credit (Form
8861).

Line 1b—Qualified Renewal
Community Wages
Enter the total qualified renewal
community wages paid or incurred
during calendar year 2007. The credit
must be figured using only the wages
that you paid or incurred in the calendar
year that ended with or within your tax
year. For example, if your tax year
began on April 1, 2007, and ended on
March 31, 2008, you must figure wages
based on the calendar year that began
on January 1, 2007, and ended on
December 31, 2007. Wages paid after
the end of the calendar year may be
used only to figure the credit claimed on
the following year’s tax return.

2
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8844, PAGE 4 of 4
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 432mm (17") x 279mm (11") FOLD TO: 216 mm (81⁄ 2 ") x 279 mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8844 (2007)

Qualified renewal community wages
are qualified wages paid or incurred by
an employer for services performed by
an employee while the employee is a
qualified renewal community employee
(defined earlier). The maximum wages
that may be taken into account for each
employee is limited to $10,000. The
$10,000 amount for any employee is
reduced by the amount of wages paid or
incurred during the calendar year on
behalf of that employee that are used in
figuring:
● The work opportunity credit (Form
5884) or
● The welfare-to-work credit (Form 8861).

Page

Line 9
Use only if you amend your 2007 return
to carry back an unused credit from
2008.

Line 11
A cooperative described in section
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 first figure its tax
liability. While any excess is allocated to
patrons, any credit recapture applies as
if the cooperative had claimed the entire
credit.

Line 2

Line 19

In general, you must reduce your
deduction for salaries and wages and
certain educational and training costs by
the line 2 credit amount. You must make
this reduction even if you cannot take
the full credit this year because of the
tax liability limit. If you capitalized any
costs on which you figured the credit,
reduce the amount capitalized by the
amount of the credit attributable to
these costs.
Members of a controlled group of
corporations and businesses under
common control are treated as a single
employer in determining the credit. The
members share the credit in the same
proportion that they paid or incurred
qualifying wages.

Although you may not owe alternative
minimum tax (AMT), you generally must
still compute the tentative minimum tax
(TMT) to figure your credit. For a small
corporation exempt from the AMT under
section 55(e), enter zero. Otherwise,
complete and attach the applicable AMT
form or schedule. Enter on line 19 the
TMT from the line shown below.
● Individuals: Form 6251, line 33.
● Corporations: Form 4626, line 12.
● Estates and trusts: Form 1041,
Schedule I, line 54.

Line 5
Enter the amount included on line 4 that
is from a passive activity. Generally, a
passive activity is a trade or business in
which you did not materially participate.
Rental activities are generally considered
passive activities, whether or not you
materially participate. For details, see
Form 8582-CR, Passive Activity Credit
Limitations (for individuals, trusts, and
estates), or Form 8810, Corporate
Passive Activity Loss and Credit
Limitations (for corporations).

Line 7
Enter the passive activity credit allowed
for the 2007 EZRCE credit from Form
8582-CR or Form 8810. See the
instructions for the applicable form for
details.

Line 20
See section 38(c)(5) for special rules that
apply to married individuals filing
separate returns, controlled groups,
regulated investment companies, real
estate investment trusts, and estates and
trusts.

Line 26
If you cannot use all of the credit
because of the tax liability limit (line 25
is smaller than line 12), carry the unused
credit back 1 year then forward up to 20
years. To carry back an unused credit,
file an amended income tax return (Form
1040X, 1120X, or other amended return)
for the prior tax year or an application
for tentative refund (Form 1045,
Application for Tentative Refund, or
Form 1139, Corporation Application for
Tentative Refund). If you file an
application for tentative refund, it
generally must be filed by the end of the
tax year following the tax year in which
the credit arose.

Printed on recycled paper

4

Paperwork Reduction Act Notice. We
ask for the information on this form to
carry out the Internal Revenue laws of
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law. Generally, tax returns and return
information are confidential, as required
by section 6103.
The time needed to complete and file
this form will vary depending on
individual circumstances. The estimated
burden for individual taxpayers filing this
form is approved under OMB control
number 1545-0074 and is included in
the estimates shown in the instructions
for their individual income tax return. The
estimated burden for all other taxpayers
who file this form is shown below.
Recordkeeping
8 hr., 22 min.
Learning about the
law or the form

2 hr., 22 min.

Preparing and sending
the form to the IRS

2 hr., 37 min.

If you have comments concerning the
accuracy of these time estimates or
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