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AH XSL/XML Fileid: … ns/I8844/202003/A/XML/Cycle06/source (Init. & Date) _______

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Department of the Treasury
Internal Revenue Service
Instructions for Form 8844

(Rev. March 2020)
Empowerment Zone Employment Credit

Section references are to the Internal Revenue Code Form 3800, General Business Credit. The following
unless otherwise noted. exceptions apply.
• You are an estate or trust and the source credit can be
Future Developments allocated to beneficiaries. For more details, see the
For the latest information about developments related to instructions for Form 1041, Schedule K-1, box 13, code K.
Form 8844 and its instructions, such as legislation • You are a cooperative and the source credit can or
enacted after they were published, go to IRS.gov/ must be allocated to patrons. For more details, see the
Form8844. instructions for Form 1120-C, Schedule J, line 5c.

What's New Empowerment Zones
The empowerment zone designations expired at the end Urban areas. Parts of the following urban areas were
of 2017. However, the Taxpayer Certainty and Disaster empowerment zones.
Tax Relief Act of 2019 provides for an extension of the • Pulaski County, AR
designations to the end of 2020. To extend the • Tucson, AZ
designations, state and local governments must amend • Fresno, CA
their nominations of the designated zones in order to • Los Angeles, CA (city and county)
move the termination date to December 31, 2020. The • Santa Ana, CA
IRS is working to provide guidance on how to amend the • New Haven, CT
nomination of an empowerment zone to provide for a new • Jacksonville, FL
termination date. Go to IRS.gov/Form8844 for updates on • Miami/Dade County, FL
the guidance once it becomes available. • Chicago, IL
Credit extension. The empowerment zone employment • Gary/Hammond/East Chicago, IN
credit for qualified zone wages earned is retroactively • Boston, MA
extended for qualified zone wages paid or incurred in • Baltimore, MD
2018, 2019, and 2020. • Detroit, MI
• Minneapolis, MN
Periodic updating. Form 8844 and its instructions will no St. Louis, MO/East St. Louis, IL
•
longer be updated annually. Instead, they'll only be Cumberland County, NJ
•
updated when necessary. Use these instructions and the New York, NY
•
Form 8844 (Rev. March 2020) for tax years beginning Syracuse, NY
•
after 2017. Yonkers, NY
•
For previous years, see the applicable Form 8844 and • Cincinnati, OH
instructions. For example, use the 2017 Form 8844 with • Cleveland, OH
the 2017 Instructions for Form 8844 for tax year ending • Columbus, OH
December 31, 2017. • Oklahoma City, OK
For 2018 returns, use Form 8844 (Rev. March • Philadelphia, PA/Camden, NJ
TIP 2020) because it has lines 1 and 2 available, if • Columbia/Sumter, SC
needed. • Knoxville, TN
• El Paso, TX
• San Antonio, TX
General Instructions • Norfolk/Portsmouth, VA
• Huntington, WV/Ironton, OH
Purpose of Form Note. The treatment of parts of Washington, DC as an
Use Form 8844 (Rev. March 2020) to claim the empowerment zone ended at the end of 2011.
empowerment zone employment credit. For the tax year, Rural areas. Part of the following rural areas were
the credit is 20% of the employer's qualified zone wages empowerment zones.
(up to $15,000) paid or incurred during the calendar year • Desert Communities, CA (part of Riverside County)
for services performed by an employee while the • Southwest Georgia United, GA (part of Crisp County
employee is a qualified zone employee. and all of Dooly County)
Partnerships and S corporations must file this form to • Southernmost Illinois Delta, IL (parts of Alexander and
claim the credit. All others are generally not required to Johnson Counties and all of Pulaski County)
complete or file this form if their only source for this credit • Kentucky Highlands, KY (part of Wayne County and all
is a partnership, S corporation, estate, trust, or of Clinton and Jackson Counties)
cooperative. Instead, they can report this credit directly on • Aroostook County, ME (part of Aroostook County)

Mar 17, 2020 Cat. No. 66393K

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• Mid-Delta, MS (parts of Bolivar, Holmes, Humphreys, 1. The larger of the unadjusted bases or fair market
Leflore, Sunflower, and Washington Counties) value of the farm assets owned by the employer.
• Griggs-Steele, ND (part of Griggs County and all of 2. The value of the farm assets leased by the
Steele County) employer.
• Oglala Sioux Tribe, SD (parts of Jackson and Bennett
Counties and all of Shannon County) Note. Certain farming activities are described in section
• Middle Rio Grande FUTURO Communities, TX (parts of 2032A(e)(5)(A) or (B).
Dimmit, Maverick, Uvalde, and Zavala Counties)
Early termination of employee. Generally, an individual
• Rio Grande Valley, TX (parts of Cameron, Hidalgo,
is not a qualified zone employee unless employed for at
Starr, and Willacy Counties)
least 90 days. The 90-day requirement does not apply in
Qualified zone employee. A qualified zone employee is the following situations.
any employee (full-time or part-time) of the employer who: • The employee is terminated because of misconduct as
• Performs substantially all of the services for that determined under the applicable state unemployment
employer within an empowerment zone in the employer’s compensation law.
trade or business, and • The employee becomes disabled before the 90th day.
• Has his or her principal residence within that However, if the disability ends before the 90th day, the
empowerment zone while performing those services. employer must offer to reemploy the former employee.
See Qualified Zone Employees below for a list of An employee is not treated as terminated if the
persons who are not qualified employees. corporate employer is acquired by another corporation
under section 381(a) and the employee continues to be
Qualified Zone Employees employed by the acquiring corporation. Nor is a mere
Any person may be a qualified employee except the change in the form of conducting the trade or business
following. treated as a termination if the employee continues to be
• Any relative of the employer described in sections employed in such trade or business and the taxpayer
152(d)(2)(A) through 152(d)(2)(G). retains a substantial interest therein.
• A dependent of the employer described in section
152(d)(2)(H). Wages
• If the employer is a corporation, any individual who Wages are defined in section 51(c) and are generally
bears any of the relationships described in sections wages (excluding tips) subject to the Federal
152(d)(2)(A) through 152(d)(2)(G), or is a dependent, as Unemployment Tax Act (FUTA), without regard to the
described in section 152(d)(2)(H), of an individual who FUTA dollar limitation. The following are also treated as
owns (or is considered to own under section 267(c)) more wages.
than 50% in value of the outstanding stock of the • Amounts paid or incurred by the employer as
corporation. educational assistance payments excludable from the
• If the employer is an entity other than a corporation, any employee’s gross income under section 127. However,
individual who owns directly or indirectly more than 50% this does not apply if the employee has a relationship to
of the capital and profits interest, including constructive the employer described in section 267(b) or 707(b)(1)
ownership, in the entity. (substituting “10%” for “50%” in those sections) or the
• If the employer is an estate or trust, any individual who employer and employee are engaged in trades or
is a grantor, beneficiary, or fiduciary of the estate or trust businesses under common control (within the meaning of
(or a dependent, as described in section 152(d)(2)(H), of sections 52(a) and (b)).
such an individual), or any individual who is a relative, as • Amounts paid or incurred by the employer on behalf of
described in sections 152(d)(2)(A) through 152(d)(2)(G), an employee under age 19 for a youth training program
of the grantor, beneficiary, or fiduciary of the estate or operated by that employer in conjunction with local
trust. education officials.
• 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, Specific Instructions
more than 5% of the capital or profits interest in the
employer. Line 1—Qualified Zone Wages
• Any individual employed by the employer for less than Enter the total qualified zone wages paid or incurred
90 days. For exceptions, see Early termination of during the calendar year. The credit must be figured using
employee, later. only the wages that you paid or incurred in the calendar
• Any individual employed by the employer at any private year that ended with or within your tax year. For example,
or commercial golf course, country club, massage parlor, if your tax year began on April 1, 2018, and ended on
hot tub facility, suntan facility, racetrack or other facility March 31, 2019, you must figure wages based on the
used for gambling, or any store the principal business of calendar year that began on January 1, 2019, and ended
which is the sale of alcoholic beverages for consumption on December 31, 2019. Wages paid after the end of the
off premises. calendar year may be used only to figure the credit
• Any individual employed by the employer in a trade or claimed on the following year’s tax return.
business of which the principal activity is farming (see Qualified zone wages are qualified wages paid or
Note below), but only if at the close of the tax year the incurred by an employer for services performed by an
sum of the following amounts exceeds $500,000. employee while the employee is a qualified zone

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employee (defined earlier). The maximum wages that may these credits on line 3. All other filers figuring a separate
be taken into account for each employee is limited to credit on earlier lines must report the above credits on
$15,000. The $15,000 amount for any employee is line 3. All others not using earlier lines to figure a separate
reduced by the amount of wages paid or incurred during credit can report the above credits directly on Form 3800,
the calendar year on behalf of that employee that are used Part III, line 3.
in figuring the work opportunity credit (Form 5884).
Line 5
Line 2
Cooperatives. A cooperative described in section
In general, you must reduce your deduction for salaries 1381(a) must allocate to its patrons the credit in excess of
and wages and certain educational and training costs by its tax liability limit. Therefore, to figure the unused amount
the line 2 credit amount. You must make this reduction of the credit allocated to patrons, the cooperative must
even if you cannot take the full credit this year because of first figure its tax liability. While any excess is allocated to
the tax liability limit. If you capitalized any costs on which patrons, any credit recapture applies as if the cooperative
you figured the credit, reduce the amount capitalized by had claimed the entire credit.
the amount of the credit attributable to these costs.
If the cooperative is subject to the passive activity rules,
Members of a controlled group of corporations and include on line 3 any empowerment zone and renewal
businesses under common control are treated as a single community employment credits from passive activities
employer in determining the credit. The members share disallowed for prior years and carried forward to this year.
the credit in the same proportion that they paid or incurred
Complete Form 8810, Corporate Passive Activity Loss
qualifying zone wages.
and Credit Limitations, to determine the allowed credit that
Line 3 must be allocated between the cooperative and the
Enter total empowerment zone employment credits from: patrons. For details, see the Instructions for Form 8810.
• Schedule K-1 (Form 1065), Partner’s Share of Income, Estates and trusts. Allocate the empowerment zone
Deductions, Credits, etc., box 15 (code L); employment credit on line 4 between the estate or trust
• Schedule K-1 (Form 1120-S), Shareholder’s Share of and the beneficiaries in the same proportion as income
Income, Deductions, Credits, etc., box 13 (code L); was allocated and enter the beneficiaries' share on line 5.
• Schedule K-1 (Form 1041), Beneficiary’s Share of If the estate or trust is subject to the passive activity rules,
Income, Deductions, Credits, etc., box 13 (code K); and include on line 3 any empowerment zone and renewal
• Form 1099-PATR, Taxable Distributions Received community employment credits from passive activities
From Cooperatives, in the appropriate line, or other notice disallowed for prior years and carried forward to this year.
of credit allocation. Complete Form 8582-CR, Passive Activity Credit
Partnerships and S corporations must report the above Limitations, to determine the allowed credit that must be
credits on line 3. Also, estates and trusts that can allocate allocated between the estate or trust and the
the above credits to beneficiaries and cooperatives that beneficiaries. For details, see the Instructions for Form
can allocate the above credits to patrons must report 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 and business taxpayers filing this form is approved under OMB control number 1545-0074 and 1545-0123
and is included in the estimates shown in the instructions for their individual and business income tax return. The
estimated burden for all other taxpayers who file this form is shown below.

Recordkeeping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 hr., 4 min.
Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hr., 22 min.
Preparing and sending the form to the IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 hr., 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.

Instructions for Form 8844 (Rev. 03-2020) -3-

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