Form 8845 Indian Employment Credit

1
TLS, have you
transmitted all R
text files for this
cycle update?

Date

Form

I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8845, PAGE 1 of 2
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") 3 279 mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

8845

Department of the Treasury
Internal Revenue Service

Name(s) as shown on return

1
2
3
4
5
6
7
8

Action

Signature

O.K. to print
Revised proofs
requested

Indian Employment Credit

OMB No. 1545-1417

2008

f
o
s
a
8
t
0
f
0
a
2
r
/
D /08
2
1
©

Attach to your tax return.

Total of qualified wages and qualified employee health insurance costs paid or incurred during
the tax year
Calendar year 1993 qualified wages and qualified employee health insurance costs
(see instructions). If none, enter -0Incremental increase. Subtract line 2 from line 1. If zero or less, enter -0Multiply line 3 by 20% (.20) (see instructions for the adjustment you must make for salaries
and wages)
Indian employment credits from partnerships, S corporations, cooperatives, estates,
and trusts
Add lines 4 and 5. Cooperatives, estates, and trusts, go to line 7; partnerships and S corporations,
report this amount on Schedule K; all others, report this amount on Form 3800, line 1g
Amount allocated to patrons of the cooperative or beneficiaries of the estate or trust
(see instructions)
Cooperatives, estates and trusts. Subtract line 7 from line 6. Report this amount on
Form 3800, line 1g

General Instructions

Date

Section references are to the Internal Revenue Code unless
otherwise noted.

What’s New
● The tax liability limit is no longer figured on this form; instead, it
must be figured on Form 3800, General Business Credit.
● Taxpayers that are not partnerships, S corporations, cooperatives,
estates, or trusts, and whose only source of this credit is from those
pass-through entities, are not required to complete or file this form.
Instead, they can report this credit directly on line 1i of Form 3800.
● The IRS will revise this December 2006 version of the form only
when necessary. Continue to use this version for tax years beginning
after 2005 until a new revision is issued.

Purpose of Form
Employers of American Indians who are qualified employees use
Form 8845 to claim the Indian employment credit.

Definitions
Qualified wages means any wages paid or incurred by an employer
for services performed by an employee while such employee is a
qualified employee (see below). It does not include wages
attributable to services rendered during the 1-year period beginning
with the day the employee starts work for the employer if any portion
of such wages is used in figuring the work opportunity credit on
Form 5884. Wages has the same meaning given in section 51.
Qualified employee health insurance costs means any amount
paid or incurred by an employer for health insurance coverage for an
employee while the employee is a qualified employee. Do not include
amounts paid or incurred for health insurance under a salary
reduction arrangement.
Qualified employee means, for any tax period, any employee who
meets all three of the following tests.
1. The employee is an enrolled member, or the spouse of an
enrolled member, of an Indian tribe. Each tribe determines who
qualifies for enrollment and what documentation, if any, is issued as
proof of enrollment status. Examples of appropriate documentation
will vary from one tribe to another and may include a tribal
membership card, Certified Degree of Indian Blood (CDIB) card, or
letter from the tribe or tribal enrollment office. Employers should
retain a copy of the proof of enrollment status provided by the
employee.
2. Substantially all the services performed by the employee for the
employer are performed within an Indian reservation (defined on
page 2).
For Paperwork Reduction Act Notice, see back of form.

Attachment
Sequence No.
Identifying number

113

1
2
3
4
5
6
7
8

3. The employee’s principal residence while performing such
services is on or near the reservation where the services are
performed.
However, the employee shall be treated as a qualified employee
for any tax year only if more than 50% of the wages paid or incurred
by the employer to the employee during the tax year are for services
performed in the employer’s trade or business. Each member of a
controlled group must meet this requirement independently. Also,
see the instructions for lines 1 and 2.
The following are not qualified employees.
● Any individual who bears any of the relationships described in
sections 152(d)(2)(A) through 152(d)(2)(G) to, or is a dependent
described in section 152(d)(2)(H) of, the employer.
● 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) to, 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 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 that 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.
● If the employer is other than a corporation, estate, or trust, 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 a corporation, 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 who performs services involving the conduct of
Class I, II, or III gaming, as defined in section 4 of the Indian Gaming
Regulatory Act, and any individual performing any services in a
building housing such gaming activity.
Indian tribe means any Indian tribe, band, nation, pueblo, or other
organized group or community, including any Alaska Native village or
regional or village corporation, as defined in, or established under,
the Alaska Native Claims Settlement Act, that is recognized as
eligible for the special programs and services provided by the United
States to Indians because of their status as Indians. See the Federal
Register dated July 12, 2002 (67 FR 46328), for the most recent
listing of federally recognized Indian tribes.

Cat. No. 16146D

Form

8845

(2008)

1
I.R.S. SPECIFICATIONS
TO BE REMOVED BEFORE PRINTING
INSTRUCTIONS TO PRINTERS
FORM 8845, PAGE 2 of 2
MARGINS: TOP 13 mm (1⁄ 2 "), CENTER SIDES.
PRINTS: HEAD TO HEAD
PAPER: WHITE WRITING, SUB. 20.
INK: BLACK
FLAT SIZE: 203 mm (8") 3 279 mm (11")
PERFORATE: ON FOLD
DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8845 (2008)

Page

Indian reservation means a reservation as defined in section 3(d)
of the Indian Financing Act of 1974 or section 4(10) of the Indian
Child Welfare Act of 1978.

Early Termination of Employee

2

Line 2

f
o
s
a
8
t
0
f
0
a
2
r
/
D /08
2
1

Generally, if the employer terminates a qualified employee less than
1 year after the date of initial employment, the following rules apply.
● No wages or qualified employee health insurance costs may be
taken into account for the tax year the employment is terminated.
● Any credits allowed for prior tax years by reason of wages paid or
incurred to that employee must be recaptured. Include the recapture
amount on the line for recapture taxes on your income tax return.
Also, any carryback or carryover of the credit must be adjusted.
These rules do not apply if:
● The employee voluntarily quits,
● The employee is terminated because of misconduct, or
● The employee becomes disabled. However, if the disability ends
during the first year of employment, the employer must offer
reemployment to that employee.
An employee is not treated as terminated if the corporate
employer is acquired by another corporation covered under the rules
in 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 in such trade or business.

Member of Controlled Group or Business
Under Common Control
For purposes of figuring the credit, all members of a controlled
group of corporations (as defined in section 52(a)) and all members
of a group of businesses under common control (as defined in
section 52(b)), are treated as a single employer. As a member,
compute your credit based on your proportionate share of qualified
wages and qualified employee health insurance costs giving rise to
the group’s Indian employment credit. Enter your share of the credit
on line 4. Attach a statement showing how your share of the credit
was figured, and write “See Attached” next to the entry space for
line 4.

Specific Instructions
Figure the credit for your trade or business on lines 1 through 4. The
following rules apply for lines 1 and 2.
● The total amount of qualified wages and qualified employee health
insurance costs for each qualified employee for any tax year is
limited to $20,000.
● For a short tax year, multiply the wages limit by the number of
days in the short tax year and divide the result by 365.

Line 1
Enter the total qualified wages and qualified employee health
insurance costs paid or incurred for qualified employees during the
tax years. An employee is not a qualified employee if the total
amount of wages paid or incurred by the employer to the employee
during the tax year (whether or not for services within an Indian
reservation) exceeds $40,000.

Enter the total qualified wages and qualified employee health
insurance costs paid or incurred by the employer (or predecessor)
for qualified employees during calendar year 1993 (as if section 45A
had been in effect during 1993). If none, enter zero. For this purpose,
an employee is not a qualified employee if the total amount of wages
paid or incurred by the employer to the employee during calendar
year 1993 (whether or not for services within an Indian reservation)
exceeds $30,000.

Line 4

Generally, you must reduce the deductions on your return for
salaries and wages and health insurance costs by the credit on line
4, 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 credit attributable to
these costs.

Line 7

Cooperative. 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.

Estates and trusts. Allocate the Indian employment credit on line 6
between the estate or trust and the beneficiaries in the same
proportion as income was allocated and enter the beneficiaries share
on line 7.

Paperwork Reduction Act Notice. We ask for the information on this
form to carry out the Internal Revenue laws of the United States. You
are required to give us the information. We need it to ensure that you
are complying with these laws and to allow us to figure and collect the
right amount of tax.
You are not required to provide the information requested on a form
that is subject to the Paperwork Reduction Act unless the form
displays a valid OMB control number. Books or records relating to a
form or its instructions must be retained as long as their contents may
become material in the administration of any Internal Revenue 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
5 hr., 44 min.
Learning about the law
or the form
1 hr., 35 min.
Preparing and sending
the form to the IRS
1 hr., 45 min.
If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would be
happy to hear from you. See the instructions for the tax return with
which this form is filed.

Printed on recycled paper