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Page 2 of 3 Fileid: … ns/I8845/202001/A/XML/Cycle02/source 18:11 - 30-Jan-2020
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
to, or is a dependent described in section 152(d)(2)(H) of, An employee isn’t treated as terminated if the corporate
the employer. employer is acquired by another corporation covered
• If the employer is a corporation, any individual who under the rules in section 381(a) and the employee
bears any of the relationships described in sections continues to be employed by the acquiring corporation.
152(d)(2)(A) through 152(d)(2)(G) to, or is a dependent Nor is a mere change in the form of conducting the trade
described in section 152(d)(2)(H) of, an individual who or business treated as a termination if the employee
owns (or is considered to own under section 267(c)) more continues to be employed in such trade or business and
than 50% in value of the outstanding stock of the the taxpayer retains a substantial interest in such trade or
corporation. business.
• If the employer is an estate or trust, any individual who
is a grantor, beneficiary, or fiduciary of the estate or trust Member of Controlled Group or
(or a dependent, as described in section 152(d)(2)(H), of Business Under Common Control
that individual), or any individual who is a relative, as
For purposes of figuring the credit, all members of a
described in sections 152(d)(2)(A) through 152(d)(2)(G),
controlled group of corporations (as defined in section
of the grantor, beneficiary, or fiduciary of the estate or
52(a)) and all members of a group of businesses under
trust.
common control (as defined in section 52(b)), are treated
• If the employer is other than a corporation, estate, or
as a single employer. As a member, figure your credit
trust, any individual who owns, directly or indirectly, more
based on your proportionate share of qualified wages and
than 50% of the capital and profits interest, including
qualified employee health insurance costs giving rise to
constructive ownership, in the entity.
the group's Indian employment credit. Enter your share of
• If the employer is a corporation, any person who owns
the credit on line 4. Attach a statement showing how your
(or is considered to own under section 318) more than 5%
share of the credit was figured, and write “See Attached”
of the outstanding or voting stock of the employer or, if not
next to the entry space for line 4.
a corporate employer, more than 5% of the capital or
profits interest in the employer.
• Any individual who performs services involving the Specific Instructions
conduct of Class I, II, or III gaming, as defined in section 4
of the Indian Gaming Regulatory Act, and any individual Figure the credit for your trade or business on lines 1
performing any services in a building housing such through 4. The following rules apply for lines 1 and 2.
gaming activity. • The total amount of qualified wages and qualified
employee health insurance costs for each qualified
Indian tribe means any Indian tribe, band, nation,
employee for any tax year is limited to $20,000.
pueblo, or other organized group or community, including
any Alaska Native village or regional or village • For a short tax year, multiply the wages limit by the
number of days in the short tax year and divide the result
corporation, as defined in, or established under, the
by 365.
Alaska Native Claims Settlement Act, that is recognized
as eligible for the special programs and services provided Line 1
by the United States to Indians because of their status as
Enter the total qualified wages and qualified employee
Indians. See the Federal Register dated February 1, 2019
health insurance costs paid or incurred for qualified
(84 FR 1200) and subsequent updates, for the most
employees during the tax year. An employee isn’t a
recent listing of federally recognized Indian tribes.
qualified employee if the total amount of wages paid or
Indian reservation means a reservation as defined in incurred by the employer to the employee during the tax
section 3(d) of the Indian Financing Act of 1974 or section year (whether or not for services within an Indian
4(10) of the Indian Child Welfare Act of 1978. reservation) exceeds $50,000.
Early Termination of Employee Line 2
Generally, if the employer terminates a qualified employee Enter the total qualified wages and qualified employee
less than 1 year after the date of initial employment, the health insurance costs paid or incurred by the employer
following rules apply. (or predecessor) for qualified employees during calendar
• No wages or qualified employee health insurance costs year 1993 (as if section 45A had been in effect during
may be taken into account for the tax year the 1993). If none, enter zero. For this purpose, an employee
employment is terminated. isn’t a qualified employee if the total amount of wages
• Any credits allowed for prior tax years by reason of paid or incurred by the employer to the employee during
wages paid or incurred to that employee must be calendar year 1993 (whether or not for services within an
recaptured. Include the recapture amount on the line for Indian reservation) exceeds $30,000.
recapture taxes on your income tax return. Also, any
carryback or carryover of the credit must be adjusted. Line 4
These rules do not apply if: Generally, you must reduce the deductions on your return
• The employee voluntarily quits, for salaries and wages and health insurance costs by the
• The employee is terminated because of misconduct, or credit on line 4, even if you can’t take the full credit this
• The employee becomes disabled. However, if the year because of the tax liability limit. If you capitalized any
disability ends during the first year of employment, the costs on which you figured the credit, reduce the amount
employer must offer reemployment to that employee. capitalized by the credit attributable to these costs.
-2- Instructions for Form 8845
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