Form 8932

(Rev. December 2012) 

Department of the Treasury 

Internal Revenue Service

Credit for Employer Differential Wage Payments 

▶ Attach to your tax return. 

▶ Information about Form 8932 and its instructions is at www.irs.gov/form8932. 

OMB No. 1545-2126 

Attachment 

Sequence No. 161

Name(s) shown on return Identifying number 

1 Eligible differential wage payments paid during the tax year (see instructions) . . . . . . . 1 

2 Multiply line 1 by 20% (.20) (see instructions for the adjustment you must make) . . . . . . 2 

3 Credit for employer differential wage payments from partnerships, S corporations, cooperatives, 

estates, and trusts (see instructions) . . . . . . . . . . . . . . . . . . . . . 3

4 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 . . . . 4

5 Amount allocated to patrons of the cooperative or beneficiaries of the estate or trust (see 

instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 

6 Cooperatives, 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. 

What's New

The credit has been extended to cover eligible differential 

wage payments made in 2012 and 2013.

Purpose of Form 

An eligible small business employer (defined below) can 

use Form 8932 to claim the credit for employer differential 

wage payments. Only eligible differential wage payments 

made to qualified employees after 2008 and before 2014 

can be used to figure the credit. 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 reported on Form 

3800, General Business Credit. 

Taxpayers (other than partnerships, S corporations, 

cooperatives, 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 Form 3800. 

For details, see section 45P and Notice 2010-15, 

2010-6 I.R.B. 390, available at 

www.irs.gov/irb/2010-06_IRB/ar09.html.

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 an employee of an eligible small 

business employer 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 be paid after 2008 and before 2014 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. 

• 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.

For purposes of this definition, all persons treated as a 

single employer under subsection (b), (c), (m), or (o) of 

section 414 are treated as a single employer.

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. 

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.

For Paperwork Reduction Act Notice, see instructions. Cat. No. 37747W Form 8932 (Rev.12-2012) 
Form 8932 (Rev. 12-2012) Page 2 

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. 

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 the amount of credit that was allocated to you as a 

partner, shareholder, patron of a cooperative, or 

beneficiary. 

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. 

If the cooperative is subject to the passive activity 

rules, include on line 3 any work opportunity 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. 

If the estate or trust is subject to the passive activity 

rules, include on line 3 any credit for employer differential 

wage payments 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 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.