Form 8844 Empowerment Zone Employment Credit

Form

8844

Department of the Treasury
Internal Revenue Service
Name(s) shown on return

1

OMB No. 1545-1444

Empowerment Zone Employment Credit
Attach to your tax return.
▶ Information about Form 8844 and its instructions is at www.irs.gov/form8844.
▶

2012

Attachment
Sequence No. 99
Identifying number

Enter the total qualified wages paid or incurred during calendar year 2012 only (see instructions)
× 20% (.20)
a Qualified empowerment zone wages . . . . . . $
b Reserved . . . . . . . . . . . . . . .

1a
1b

2

Enter the amount from line 1a. See instructions for the adjustment you must make to salaries and
wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2

3

Empowerment zone employment credit from partnerships, S corporations, cooperatives, estates,
and trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

Add lines 2 and 3. Cooperatives, estates, and trusts, go to line 5. Partnerships and S corporations,
stop here and report this amount on Schedule K. All others, stop here and report this amount on
Form 3800, Part III, line 3
. . . . . . . . . . . . . . . . . . . . . . . .

4

Amount allocated to patrons of the cooperative or beneficiaries of the estate or trust (see
instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5

Cooperatives, estates, and trusts, subtract line 5 from line 4. Report this amount on Form 3800,
Part III, line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6

4

5

6

For Paperwork Reduction Act Notice, see instructions.

Cat. No. 16145S

Form 8844 (2012)

Page 2

Form 8844 (2012)

General Instructions

• Oklahoma City, OK

Section references are to the Internal
Revenue Code.

• Philadelphia, PA/Camden, NJ

Future Developments

• Knoxville, TN

For the latest information about
developments related to Form 8844 and
its instructions, such as legislation
enacted after this form and instructions
were published, go to www.irs.gov/
form8844.

What's New
The empowerment zone designation has
been extended through 2013. Therefore,
the empowerment zone employment
credit is available for 2012 and 2013.

Purpose of Form
Use Form 8844 to claim the
empowerment zone employment credit.
For tax years that include December 31,
2012, the credit is 20% of the
employer's qualified wages (up to
$15,000) paid or incurred during
calendar year 2012 on behalf of qualified
empowerment zone employees.
The credit is a component of the
general business credit, and a special
tax liability limit applies. The allowable
credit is figured in Part II of 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

• Columbia/Sumter, SC
• 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).

See Qualified Employees below for a
list of persons who are not qualified
employees.

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, as 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, later.
• 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.
• Any individual employed by the
employer in a trade or business of 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.
1. The larger of the unadjusted bases
or fair market value of the farm assets
owned by the employer.
2. The value of the farm assets leased
by the employer.

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Form 8844 (2012)

Note. Certain farming activities are
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.

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 the
calendar year 2012. 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, 2012, and ended on March 31, 2013,
you must figure wages based on the
calendar year that began on January 1,
2012, and ended on December 31, 2012.
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).

Line 2
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.

Line 5
Cooperatives. 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.

If the cooperative is subject to the
passive activity rules, include on line 3
any empowerment zone and renewal
community employment credits from
passive activities disallowed for prior
years and carried forward to this year.
Complete Form 8810, Corporate Passive
Activity Loss and Credit Limitations, to
determine the allowed credit that must
be allocated between the cooperative
and the patrons. For details see the
instructions for Form 8810.
Estates and trust. If the estate or trust
is subject to the passive activity rules,
include on line 3 any empowerment zone
and renewal community employment
credits from passive activities disallowed
for prior years and carried forward to this
year. Complete Form 8582-CR, Passive
Activity Credit Limitations, to determine
the allowed credit that must be allocated
between the estate or trust and the
beneficiaries. For details, see the
instructions for Form 8582-CR.
Paperwork Reduction Act Notice. We
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the right amount of tax.
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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 . . . . 4 hr., 4 min.
Learning about the
law or the form . . . . 2 hr., 22 min.
Preparing and sending
the form to the IRS . . 2 hr., 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.