Form 8932

(Rev. January 2016) 

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, stop here and 

report this amount on Schedule K. All others, stop here and report this amount on Form 3800, Part III, 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, 

Part III, line 1w . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 

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.

What's New

• The credit has been extended to cover eligible 

differential wage payments made after 2014. 

• For tax years beginning after 2015, employers who are 

not eligible small business employers can claim this 

credit.

Purpose of Form 

Use Form 8932 to claim the credit for eligible differential 

wage payments made to qualified employees after 2008. 

For tax years beginning before 2016, you must be an 

eligible small business employer (defined later) to claim 

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. 

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/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 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.

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.

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. 1-2016) 
Form 8932 (Rev. 1-2016) 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 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 1120S), 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 10, or other notice of credit allocation. 

Partnerships, S corporations, cooperatives, estates, 

and trusts must always report the above credits on line 3. 

All other filers figuring a separate credit on earlier lines 

must 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. 

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. 

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.

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.