OMB No. 1545-1417

Form 8845 Indian Employment Credit

Department of the Treasury

Internal Revenue Service  Attach to your return.

Attachment

Sequence No. 113

Name(s) as shown on return Identifying number

Current Year Credit

1 Total of qualified wages and qualified employee health insurance costs paid or incurred during

the tax year 1

Calendar year 1993 qualified wages and qualified employee health insurance costs (see

instructions). If none, enter -0-

2

2

If you are a— Then enter total of current year Indian employment credit(s) from—

Schedule K-1 (Form 1120S), lines 12d, 12e, or 13

Schedule K-1 (Form 1065), lines 12c, 12d, or 13

Schedule K-1 (Form 1041), line 14

Written statement from cooperative

a Shareholder

b Partner

c Beneficiary

d Patron

Indian employment

credits from

pass-through entities

5

5

Total current year credit. Add lines 4 and 5. (S corporations, partnerships, estates, trusts, and

cooperatives, see instructions.)

6

6

Form 8845 (2001)

Part I



Cat. No. 16146D

3

4

3 Incremental increase. Subtract line 2 from line 1

4 Current year credit. Multiply line 3 by 20% (.20) (see instructions)

For Paperwork Reduction Act Notice, see page 3.

Part II Tax Liability Limit (See Who Must File Form 3800 to find out if you complete Part II or file Form 3800.)

● Individuals. Enter the amount from Form 1040, line 40

7

Corporations. Enter the amount from Form 1120, Schedule J, line 3; Form 1120-A,

Part I, line 1; or the applicable line of your return

●

●

10a 10a

Credit for child and dependent care expenses (Form 2441, line 9) 10b

Credit for the elderly or the disabled (Schedule R (Form 1040), line 20)

b

10d

Foreign tax credit

d

e 10e

Possessions tax credit (Form 5735, line 17 or 27)

10f f

10g g

Credit for fuel from a nonconventional source

h

Qualified electric vehicle credit (Form 8834, line 20)

Add lines 10a through 10l 10m

11 Net income tax. Subtract line 10m from line 9. If zero, skip lines 12 through 15 and enter -0- on line 16 11

8 Alternative minimum tax:

● Individuals. Enter the amount from Form 6251, line 28

● Corporations. Enter the amount from Form 4626, line 15 8

● Estates and trusts. Enter the amount from Form 1041, Schedule I, line 39

12 Tentative minimum tax (see instructions):

● Individuals. Enter the amount from Form 6251, line 26

12

● Corporations. Enter the amount from Form 4626, line 13

● Estates and trusts. Enter the amount from Form 1041,

Schedule I, line 37

13

Enter 25% (.25) of the excess, if any, of line 13 over $25,000 (see instructions)

15

Subtract line 15 from line 11. If zero or less, enter -0-

15

16

Indian employment credit allowed for the current year. Enter the smaller of line 6 or line 16

here and on Form 1040, line 50; Form 1120, Schedule J, line 6d; Form 1120-A, Part I, line 4a;

Form 1041, Schedule G, line 2c; or the applicable line of your return 17



Mortgage interest credit (Form 8396, line 11)

c 10c

7 Regular tax before credits:

9 Add lines 7 and 8 9

14

Enter the greater of line 12 or line 14

13



14

i

Adoption credit (Form 8839, line 14) 10h

District of Columbia first-time homebuyer credit (Form 8859, line 11) 10i

j

k

l

Child tax credit (Form 1040, line 48)

Education credits (Form 8863, line 18)

10j

10k

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

Net regular tax. Subtract line 10m from line 7. If zero or less, enter -0-

17

16



2001

10l

Rate reduction credit (Form 1040, line 47)

m
Form 8845 (2001) Page 2

Qualified employee health insurance costs means any

amount paid or incurred by an employer for health insurance

to the extent such amount is attributable to coverage

provided to any employee while such employee is a qualified

employee. No amount paid or incurred for health insurance

under a salary reduction arrangement may be included.

Qualified employee means, for any tax period, any

employee of an employer if the employee 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 during that

period by the employee for the employer are performed

within an Indian reservation (defined below).

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 of the employer only if more than

50% of the wages paid or incurred by the employer to the

employee during the 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(a)(1) through 152(a)(8) to, or is a

dependent described in section 152(a)(9) of, 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.

● 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 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(a)(9), of that

individual), or any individual who is a relative, as described in

sections 152(a)(1) through 152(a)(8), 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.

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 March 13, 2000 (65 FR 13298), for the most recent

listing of federally recognized Indian tribes.

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

Generally, if the employer terminates a qualified employee

less than 1 year after the date of initial employment, the

following rules apply.

● If the employer is a corporation, any individual who bears

any of the relationships described in sections 152(a)(1)

through 152(a)(8) to, or is a dependent described in section

152(a)(9) 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.

● 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 by the employer 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.

General Instructions

Section references are to the Internal Revenue Code unless

otherwise noted.

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.

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.

● The employee voluntarily quits;

● The employee is terminated because of misconduct; or

● The employee becomes disabled. However, if the disability

ends before the end of the first year of employment, the

employer must offer reemployment to the former employee.

These rules do not apply if:

The maximum wages for a qualified employee have

increased to $35,000. See the instructions for line 1.

A Change To Note
Form 8845 (2001) Page 3

● Members of a controlled group of corporations and

businesses under common control are treated as a single

employer in determining the credit.

Line 1

Line 2

● 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 4

Line 6

S corporations and partnerships. Allocate the line 6 credit

among the shareholders or partners. Attach Form 8845 to

Form 1120S or 1065 and show the credit for each

shareholder or partner on Schedule K-1. Electing large

partnerships, include this credit in “general credits.”

Estates and trusts. The line 6 credit is allocated between

the estate or trust and the beneficiaries in proportion to the

income allocable to each. On the dotted line to the left of the

amount on line 6, the estate or trust should enter its part of

the total Indian employment credit. Label it “1041 Portion”

and use this amount in Part II (or on Form 3800, if required)

to figure the credit to claim on Form 1041.

Cooperatives. Most tax-exempt organizations cannot take

the Indian employment credit, but a cooperative described in

section 1381(a) takes the Indian employment credit to the

extent it has tax liability. Any excess is shared among its

patrons, but any credit recapture applies as if the

cooperative had claimed the entire credit.

Line 14

Line 17

● 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.

Who Must File Form 3800

The general business credit consists of the following

credits.

The empowerment zone employment credit, while a

component of the general business credit, is figured

separately on Form 8844 and is never carried to Form 3800.

● Investment (Form 3468).

● Work opportunity (Form 5884).

● Alcohol used as fuel (Form 6478).

● Research (Form 6765).

● Low-income housing (Form 8586).

● Enhanced oil recovery (Form 8830).

● Disabled access (Form 8826).

● Renewable electricity production (Form 8835).

● Indian employment (Form 8845).

● Employer social security and Medicare taxes paid on

certain employee tips (Form 8846).

● Contributions to selected community development

corporations (Form 8847).

● Trans-Alaska pipeline liability fund.

Part II—Tax Liability Limit

● Orphan drug (Form 8820).

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

● Welfare-to-work (Form 8861).

● More than one of the credits included in the general

business credit listed below,

● A carryback or carryforward of any of the credits,

● A credit from a passive activity, or

● General credits from an electing large partnership

(Schedule K-1 (Form 1065-B)).

Complete Form 3800, General Business Credit, instead of

completing Part II of Form 8845 to figure the tax liability limit

if for this year you have:

Line 12

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

and enter the TMT on line 12.

See section 38(c)(3) for special rules that apply to married

couples filing separate returns, controlled corporate groups,

regulated investment companies, real estate investment

trusts, and estates and trusts.

If you cannot use all of the credit because of the tax liability

limit (line 16 is smaller than line 6), carry the excess credit

back 1 year and then forward for 20 years. See the

Instructions for Form 3800 for details.

Enter the total qualified wages and qualified employee health

insurance costs paid or incurred for qualified employees

during the tax year. 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 $35,000.

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.

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.

If you have a credit from a passive activity, stop here and go

to Form 3800.

● New markets (Form 8874).

Specific Instructions

Figure the current year credit for your trade or business on

lines 1 through 4. Skip lines 1 through 4 if you are only

claiming a credit that was allocated to you from a

pass-through entity. The following rules apply for lines 1 and

2.

Part I—Current Year Credit
Form 8845 (2001) Page 4

Recordkeeping 7 hr., 39 min.

Learning about the law

or the form 1 hr., 40 min.

Preparing and sending

the form to the IRS 1 hr., 53 min.

The time needed to complete and file this form will vary

depending on individual circumstances. The estimated

average time is:

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.

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.