OMB No. 1545-1417

Form 8845 Indian Employment Credit

Department of the Treasury

Internal Revenue Service © Attach to your return.

Attachment

Sequence No. 93

Name(s) as shown on return Identifying number

Current Year Indian Employment 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 13d, 13e, or 14

Schedule K-1 (Form 1041), line 13

Written statement from cooperative

a Shareholder

b Partner

c Beneficiary

d Patron

Indian employment

credits from

flow-through entities

5

5

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

cooperatives, see instructions.)

6

6

Tax Liability Limitation (See Who Must File Form 3800 to see if you complete Part II or file Form 3800.)

7a Individuals. Enter amount from Form 1040, line 40 

Corporations. Enter amount from Form 1120, Schedule J, line 3 (or Form 1120-A, Part I, line 1) 7 b

c Other filers. Enter regular tax before credits from your return 

8 Credits that reduce regular tax before the Indian employment credit:

a Credit for child and dependent care expenses (Form 2441, line 10) 8a

b Credit for the elderly or the disabled (Schedule R (Form 1040), line 21) 8b

c Mortgage interest credit (Form 8396, line 11) 8c

d Foreign tax credit (Form 1116, line 32, or Form 1118, Sch. B, line 12) 8d

e Possessions tax credit (Form 5735) 8e

Orphan drug credit (Form 6765, line 10) 8f f

g Credit for fuel from a nonconventional source 8g

Add lines 8a through 8h

h

9 Net regular tax. Subtract line 8i from line 7 9

10 Tentative minimum tax (see instructions):

a Individuals. Enter amount from Form 6251, line 26

b Corporations. Enter amount from Form 4626, line 13

c Estates and trusts. Enter amount from Form 1041, Schedule H, line 37 

11 Net income tax:

a Individuals. Add line 9 above and line 28 of Form 6251

b Corporations. Add line 9 above and line 15 of Form 4626

c Estates and trusts. Add line 9 above and line 39 of Form 1041, Schedule H

12 If line 9 is more than $25,000, enter 25% (.25) of the excess (see instructions) 12

13 13 Subtract line 10 or line 12, whichever is greater, from line 11. If less than zero, enter -0-

Indian employment credit allowed for the current year. Enter the smaller of line 6 or line 13. This

is your General Business Credit for 1994. Enter here and on Form 1040, line 44; Form 1120, Schedule

J, line 4e; Form 1120-A, Part I, line 2a; Form 1041, Schedule G, line 2c; or the appropriate line of

other income tax returns 

14

14

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.

Recordkeeping 5 hr., 59 min.

Learning about the law

or the form 1 hr., 5 min.

Preparing and sending

the form to the IRS 1 hr., 14 min.

The time needed to complete and file this form

will vary depending on individual circumstances.

The estimated average time is:

Form 8845 (1994)

Part I

Part II

%

%

%

%

Cat. No. 16146D

Paperwork Reduction Act Notice

8i

8h

i

Qualified electric vehicle credit (Form 8834, line 19)

3

4

3 Incremental increase. Subtract line 2 from line 1

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

10

11

General Instructions

Section references are to the Internal Revenue

Code unless otherwise noted.

Generally, the credit is 20% of the excess of

an employer’s current year qualified wages and

qualified employee health insurance costs (up to

$20,000 per employee) over the sum of the

corresponding amounts paid or incurred during

calendar year 1993 by the employer (or

predecessor).

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. You can write to both the IRS

and the Office of Management and Budget at

the addresses listed in the instructions for the

tax return with which this form is filed.

Purpose of Form

The Indian employment credit, under section

45A, is allowed to employers of American

Indians who are qualified employees (see

Definitions). Use Form 8845 to figure the 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
Form 8845 (1994) 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 the following tests:

1. The employee is an enrolled member of an

Indian tribe or the spouse of an enrolled member

of an Indian tribe. The tribe keeps the enrollment

list.

2. Substantially all the services performed

during that period by the employee for the

employer are performed within an Indian

reservation (defined in next column).

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.

The following are not qualified employees:

● Any individual who bears any of the

relationships described in sections 152(a)(1)

through (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,

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 employee voluntarily quits.

● The employee is terminated because of

misconduct.

● 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.

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.

Specific Instructions

Complete lines 1 through 4 to figure the current

year credit for your trade or business. Skip lines

1 through 4 if you are claiming only a credit that

was allocated to you from a flow-through entity.

The following rules apply to lines 1 and 2:

● An employee is not a qualified employee if the

total amount of wages paid or incurred by the

employer to the employee (whether or not for

services within an Indian reservation) exceeds

the amount determined at an annual rate of

$30,000. This wage limit will be adjusted for

inflation for tax years beginning after 1994.

● Members of a controlled group of corporations

and businesses under common control are

treated as a single employer in determining the

credit.

Line 1.—Enter the total qualified wages and

qualified employee health insurance costs paid

or incurred for qualified employees during the

tax year.

Line 2.—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 a short tax year, multiply the amount

determined above by a fraction, the numerator of

which is the number of days in the short tax year

and the denominator of which is 365. Enter the

result on line 2.

Line 4.—In general, you must reduce the

deductions on your return for salaries and wages

and health insurance costs by the line 4 credit

amount. This reduction must be made even if

you cannot take the full credit this year because

of the tax liability limitation. If you capitalized any

costs on which you figured the credit, reduce

the depreciable basis by the amount of the

credit attributable to these costs.

Line 6.—If you have a credit from a passive

activity, stop here and go to Form 3800.

S corporations and partnerships.—Allocate the

line 6 credit among the shareholders or partners.

Attach Form 8845 to the return and show the

credit for each shareholder or partner on

Schedule K-1.

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 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 under item 2 of

Early Termination of Employee applies as if the

cooperative had kept the entire credit and had

not shared it among its patrons.

Line 10.—Enter the tentative minimum tax (TMT)

that was figured on the appropriate alternative

minimum tax (AMT) form or schedule. Although

you may not owe AMT, you must still compute

the TMT to figure your credit.

Line 12.—See section 38(c)(3) for special rules

for married couples filing separate returns,

controlled corporate groups, and estates and

trusts.

Line 14.—If you cannot use part of the credit

because of the tax liability limitation (line 13 is

smaller than line 6), carry it back to any tax year

that ended after August 9, 1993, and then

forward for 15 years. No carryback is allowed to

any year ending before August 10, 1993. See the

Instructions for Form 3800 for details.

● If the employer is a corporation, any individual

who bears any of the relationships described in

section 152(a)(1) through (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.

Printed on recycled paper

● The aggregate amount of qualified wages and

qualified employee health insurance costs for

each qualified employee for any tax year is

limited to $20,000.

1. No wages or qualified employee health

insurance costs may be taken into account for

the tax year the employment is terminated, and

2. Any credits allowed for prior tax years by

reason of wages paid or incurred by the

employer to that employee must be recaptured.

Report the amount on the “Recapture taxes” line

of the income tax return and write “45A” to the

left of the entry. Also, any carryback or carryover

of the credit is adjusted.

These rules do not apply if:

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

targeted jobs credit on Form 5884. Wages has

the same meaning as given in section 51.

Who Must File Form 3800

If for this year you have more than one of the

credits included in the general business credit

listed below, or have a carryback or carryforward

of any of the credits, or have an Indian

employment credit from a passive activity, you

must complete Form 3800, General Business

Credit, instead of completing Part II of Form

8845 to figure the tax liability limitation.

The general business credit consists of the

following credits: investment, jobs, alcohol used

as fuel, research, low-income housing, enhanced

oil recovery, disabled access, renewable

electricity production, Indian employment,

employer social security and Medicare taxes

paid on certain employee tips, and contributions

to selected community development

corporations.

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.

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 October 21, 1993 (58 FR 54364), for the

most recent listing of federally recognized Indian

tribes.