8932 Credit for Employer Differential Wage Payments

Form 8932, Credit for Employer Differential Wage Payments
(December 2008)
Purpose: This is the second circulated draft of the new Form 8932 for your review and
comments. See below for a discussion of the major changes since the October 8, 2008,
first circulated draft.
TPCC Meeting: None, but one may be arranged if requested.
Other Products: Circulations of draft tax forms, instructions, notices, and publications
are posted at:
http://taxforms.web.irs.gov/Circulations/index.htm
Comments: Please email, fax, call, or mail any comments by December 19, 2008.
The shorten Comments period is to allow timely release and printing of the form.
Emile R. Beausejour
Tax Forms and Publications
SE:W:CAR:MP:T:B:C
Email: [email protected]
Phone: 202-622-8003
Fax: 202-622-3262

Major Changes to Form 8932
Form
• The Form 8932 has been assigned OMB No. 1545-2126.
Instructions
Page 1 –
First Column
• Under Purpose of Form:
o Within the third sentence under Purpose of Form the phrase “… qualified
employees after June 17, 2008, and before …” now reads “… qualified
employees after December 31, 2008, and before.”
This change is based on legal advice obtained from Chief Counsel of the
effect of Public Law (P.L.) 110-245 section 111 adding section 45P. The section
45P credit is computed for differential wage payments as defined in section
3401(h)(2). Because section 3401(h) is effective for remuneration paid after
December 31, 2008 (P.L. 110-245 section 105), no section 45P credit is allowed
for payments made prior to January 1, 2009.
o Added a new third paragraph, which notes taxpayers (other than partnerships, S
corporations, estates, and trusts) whose only source of this credit is from those
pass-through entities do not have to complete this form and can report the credit
directly on the Form 3800. This is added to clarify purpose of the form.

1

• Under Definitions:
o Added directly following Definitions a new section titled Eligible Differential Wage
Payment which provides the definition of an eligible differential wage payment.
This section is added at the request of Chief Counsel to clarify the difference
between eligible differential wage payment and differential wage payment.
o In the first paragraph under Differential Wage Payment the phrase “… the
payment must meet both …” now reads “… the payment must be paid after
December 31, 2008, and meet.” This is based on the legal advice from Chief
Counsel noted earlier.
Second Column
• Under Uniformed Services the phrase “… Army National Guard, Air National Guard,
the commissioned corps …” now reads “… Army National Guard and the Air National
Guard when engaged in active duty for training, inactive duty training, or full-time
National Guard duty, the commissioned corps.” This is based on the request from Chief
Counsel.
• The paragraph under Coordination With Other Credits was rewritten to only note any
research credit or orphan drug credit otherwise allowable for compensation paid to any
employee is reduced by any credit allowed on this form for that employee. This is
based on legal advice from Chief Counsel as military differential pay is not considered
wages under section 3306 nor section 3121.
Page 2 –
First Column
• Added section titled Line 3 which was initially omitted.
Second Column
• Under Paperwork Reduction Act Notice, the estimated burden hours have been
updated.

2

6
TLS, have you
transmitted all R
text files for this
cycle update?

Date

I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
FORM 8932, 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: 407 mm (16") 3 279 mm (11"),
FOLD TO: 203 mm (8") 3 279 mm (11")
PERFORATE: ON FOLD

DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form

8932

Action
O.K. to print
Revised proofs
requested

Credit for Employer Differential Wage Payments

Department of the Treasury
Internal Revenue Service

Name(s) shown on return

f
o
s
a
8
t
0
f
0
a
2
r
/
D /09
2
1
©

Attach to your tax return.

Attachment
Sequence No.

Eligible differential wage payments paid during the tax year (see instructions)
Multiply line 1 by 20% (.20) (see instructions for the adjustment you must make)

3

Credit for employer differential wage payments from partnerships, S corporations, cooperatives,
estates, and trusts (see instructions)
Add lines 2 and 3. Cooperatives, estates, and trusts, go to line 5; partnerships and S corporations,
report this amount on Schedule K; all others, report this amount on Form 3800, line 1w
Amount allocated to patrons of the cooperative or beneficiaries of the estate or trust
(see instructions)
Cooperative, estates, and trusts. Subtract line 5 from line 4. Report this amount on Form 3800,
line 1w

6

General Instructions

Section references are to the Internal Revenue Code.

Purpose of Form

The credit for employer differential wage payments was
added as part of the general business credit. Use Form
8932 to claim the credit for payments you made to
qualified employees during the tax year. Only differential
wage payments made to qualified employees after
December 31, 2008, and before January 1, 2010, can
be used to figure the credit. The credit is available only
to eligible small business employers. The credit is 20%
of the first $20,000 of differential wage payments paid
to each qualified employee.
The credit for employer differential wage payments is
part of the general business credit reported on Form
3800, General Business Credit.
Taxpayers (other than partnerships, S corporations,
estates, and trusts) whose only source of this credit is
from those pass-through entities are not required to
complete or file this form. Instead, report this credit
directly on line 1w of the 2008 Form 3800.
For details, see section 45P.

Definitions
Eligible Differential Wage Payment
An eligible differential wage payment is up to $20,000 of
the differential wage payments paid to the employee for
the tax year.
Qualified Employee
A qualified employee is an employee of an eligible small
business employer (defined later) for the 91-day period
immediately preceding the period for which any
differential wage payment (see below) is made.
Differential Wage Payment
To be considered a differential wage payment, the
payment must be paid after December 31, 2008, and
meet both of the following requirements.
● The payment is made by an eligible small business
employer to a qualified employee for any period during
which the employee is performing service in the
uniformed services of the United States while on active
duty for a period of more than 30 days.

For Paperwork Reduction Act Notice, see page 2.

161

Identifying number

1
2

5

Signature

OMB No. 1545-2126

(December 2008)

4

Date

1
2

3

4

5
6

● The payment represents all or a portion of the wages
the employee would have received from the employer
if the employee were performing services for the
employer.
Eligible Small Business Employer
An eligible small business employer means any
taxpayer that:
● Employed on average fewer than 50 employees on
business days during the tax year, and
● Under a written plan of the employer, provides
eligible differential wage payments to every qualified
employee of the employer.
Uniformed Services
Uniformed services means the Armed Forces, Army
National Guard and the Air National Guard when
engaged in active duty for training, inactive duty
training, or full-time National Guard duty, the
commissioned corps of the Public Health Service, and
any other category of person designated by the
President in time of war or national emergency.

Members of a Controlled Group Treated as
a Single Employer
For figuring the credit, all persons treated as a single
employer under subsection (b), (c), (m), or (o) of section
414 are treated as a single employer.

Coordination With Other Credits
The amount of any research credit or orphan drug
credit otherwise allowable for compensation paid to
any employee is reduced by the credit for differential
wage payments figured for that employee.

Disallowance for Failure To Comply With
Employment or Reemployment Rights of
Members of the Reserve Components of
the Armed Forces of the United States
No credit will be allowed to a taxpayer for:
● Any tax year beginning after June 17, 2008, in which
the taxpayer is under a final order, judgment, or other
process issued or required by a district court of the
United States under section 4323 of title 38 of the
United States Code with respect to a violation of
chapter 43 of title 38; and
● The two succeeding tax years.
Cat. No. 37747W

Form

8932

(12-2008)

6
I.R.S. SPECIFICATIONS

TO BE REMOVED BEFORE PRINTING

INSTRUCTIONS TO PRINTERS
FORM 8932, 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: 407 mm (16") 3 279 mm (11"),
FOLD TO: 203 mm (8") 3 279 mm (11")
PERFORATE: ON FOLD

DO NOT PRINT — DO NOT PRINT — DO NOT PRINT — DO NOT PRINT

Form 8932 (12-2008)

Page

f
o
s
a
8
t
0
f
0
a
2
r
/
D /09
2
1

Carryback and Carryforward of Unused
Credit

If there is any unused credit due to the tax liability limit
on Form 3800, you cannot carryback any unused credit
to any tax year ending before June 18, 2008. You will be
able to carry the credit forward 20 years.

Specific Instructions

Line 1
Generally, an eligible small business employer (defined
earlier) will be able to take a credit of 20% of the first
$20,000 in differential wage payments made to each
qualified employee during the tax year.
Line 2
Generally, you must reduce the deductions on your
return for salaries and wages by the credit on line 2,
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 3
Enter the amount of credit that was allocated to you as
a partner, shareholder, patron of a cooperative, or
beneficiary.
Line 5
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 has claimed the entire
credit.

2

Estates and trusts. Allocate the credit for employer
differential wage payments on line 4 between the estate
or trust and the beneficiaries in the same proportion as
income allocated and enter the beneficiaries share on
line 5.
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
1 hr., 54 min.
Learning about the
law or the form
30 min.
Preparing and sending the form
to the IRS
33 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