8932 Credit for Employer Differential Wage Payments

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8932

Form
(Rev. December 2021)
Department of the Treasury
Internal Revenue Service

▶

▶ Attach to your tax return.
Go to www.irs.gov/Form8932 for the latest information.

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Attachment
Sequence No. 161
Identifying number

Name(s) shown on return

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OMB No. 1545-2126

Credit for Employer Differential Wage Payments

Eligible differential wage payments paid during the tax year (see instructions) . . . . . . .
Multiply line 1 by 20% (0.20). See instructions for the adjustment you must make to your
deduction for salaries and wages . . . . . . . . . . . . . . . . . . . . . .
Credit for employer differential wage payments from partnerships, S corporations, cooperatives,
estates, and trusts (see instructions) . . . . . . . . . . . . . . . . . . . . .

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DRAFT AS OF
July 13, 2021
DO NOT FILE

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 1w . . . . . . . . . . . . . . . . . . . . . . . .
Amount allocated to patrons of the cooperative or beneficiaries of the estate or trust (see
instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cooperatives, estates, and trusts, subtract line 5 from line 4. Report this amount on Form 3800,
Part III, line 1w . . . . . . . . . . . . . . . . . . . . . . . . . . . .

General Instructions

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

Future Developments

For the latest information about developments related to
Form 8932 and its instructions, such as legislation enacted
after they were published, go to www.irs.gov/Form8932.

Which Revision To Use
Use this December 2021 revision of Form 8932 for tax
years beginning in 2021 or later, until a later revision is
issued. Use prior revisions of this form for earlier tax
years. All revisions are available at www.irs.gov/Form8932.

What’s New
Differential wage payments don’t include:
• Wage payments made after December 31, 2020, and
before July 1, 2021, if you use the same wage payments
to claim the employee retention credit on an employment
tax return such as Form 941, Employer’s QUARTERLY
Federal Tax Return;
• Wage payments made after March 31, 2021, and before
October 1, 2021, if you use the same wage payments to
claim the credit for qualified sick and family leave wages
on an employment tax return such as Form 941; and
• Wage payments made generally after December 27,
2019, and before April 17, 2021, if you use the same wage
payments to claim the 2020 qualified disaster employee
retention credit on Form 5884-A, Employee Retention
Credit for Employers Affected by Qualified Disasters.

Purpose of Form
Use Form 8932 to claim the credit for eligible differential
wage payments made to qualified employees after 2008.
The credit is 20% of up to $20,000 of differential wage
payments paid to each qualified employee during the tax
year.
The credit for employer differential wage payments is
part of the general business credit.
For Paperwork Reduction Act Notice, see instructions.

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Partnerships, S corporations, cooperatives, estates,
and trusts must file this form to claim the credit. All other
taxpayers are not required to complete or file this form if
their only source for this credit is a partnership,
S corporation, cooperative, estate, or trust. Instead, they
can report this credit directly on Form 3800, General
Business Credit.
For details, see section 45P and Notice 2010-15,
2010-6 I.R.B. 390, available at
www.irs.gov/irb/2010-06_IRB#NOT-2010-15.

Definitions
Eligible Differential Wage Payments
Eligible differential wage payments are the total
differential wage payments paid to the employee for the
tax year, up to $20,000.
Qualified Employee
A qualified employee is a person who has been an
employee for the 91-day period immediately preceding the
period for which any differential wage payment is made.
Differential Wage Payment
To be considered a differential wage payment, the
payment must meet both of the following requirements.
• The payment is made 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.
• 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.

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CAUTION

Differential wage payments don’t include wage
payments discussed under What’s New.

Controlled Groups
All persons treated as a single employer under
subsection (b), (c), (m), or (o) of section 414 are treated as
a single employer.

Cat. No. 37747W

Form 8932 (Rev. 12-2021)

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Form 8932 (Rev. 12-2021)

Uniformed Services
Uniformed services means the Armed Forces; the Army
National Guard and the Air National Guard when engaged
in active duty for training, inactive duty training, or fulltime National Guard duty; the commissioned corps of the
Public Health Service; and any other category of persons
designated by the President in time of war or national
emergency.

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 credit.
If the cooperative is subject to the passive activity
rules, include on line 3 any Form 8932 credit 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 to patrons. For
details, see the Instructions for Form 8810.
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 was allocated and enter the beneficiaries’ share
on line 5.

DRAFT AS OF
July 13, 2021
DO NOT FILE

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 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 2 succeeding tax years.

Specific Instructions
Line 1
Enter the total amount of eligible differential wage
payments made to qualified employees during the tax
year. Do not include more than $20,000 of payments for
any employee.
Line 2
Generally, you must reduce your deduction for salaries
and wages by the amount 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 total credits for employer differential wage
payments from:
• Schedule K-1 (Form 1065), Partner’s Share of Income,
Deductions, Credits, etc., box 15 (code P);
• Schedule K-1 (Form 1120-S), Shareholder’s Share of
Income, Deductions, Credits, etc., box 13 (code P);
• Schedule K-1 (Form 1041), Beneficiary’s Share of
Income, Deductions, Credits, etc., box 13 (code Q); or
• Form 1099-PATR, Taxable Distributions Received From
Cooperatives, box 12, or other notice of credit allocation.
Partnerships, S corporations, cooperatives, estates,
and trusts report the above credits on line 3. All other
filers figuring a separate credit on earlier lines also report
the above credits on line 3. All others not using earlier
lines to figure a separate credit can report the above
credits directly on Form 3800, Part III, line 1w.

If the estate or trust is subject to the passive activity
rules, include on line 3 any Form 8932 credit 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.
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