01.06.15 |
SHARE   |  

Indian Employment Credit Provides Incentive to
Hire Tribe Members

Many employment and hiring tax credits are based on hiring individuals who meet certain criteria. The challenge for businesses is often knowing which credits exist and how to claim them. The federal Indian Employment Credit was established to provide businesses with an incentive to hire members of Indian tribes who live and work on
or near reservations1.

Who can claim the credit?

Businesses that pay qualifying wages to qualifying employees (see below for definitions) are eligible to claim the credit. Businesses do not have to be located in empowerment zones or enterprise communities to qualify2.

How are qualified employees and wages determined?

Qualified employees must meet all of the following requirements3:

  • Must be an enrolled member of an Indian tribe or the spouse of an enrolled member of an Indian tribe
  • Must perform substantially all of his or her services for the employer within an Indian reservation
  • Must live on or near the Indian reservation

Qualified wages are defined as any wages paid to qualified employees that are subject to the Federal Unemployment Tax Act (FUTA) and costs related to qualified employees’ health insurance benefits4.

How is the total credit amount determined?

Take the total of qualified wages paid in the current tax year ($20,000 maximum per employee), subtract the total qualified wages paid in calendar year 1993 (zero is an acceptable answer) and multiply that number by 0.20 to determine the total credit amount5.

Indian Employment Credit Graphic

 

How do businesses claim the credit?

Fill out and submit IRS Form 8845, Indian Employment Credit.

In addition, learn more about how ADP can help businesses identify and capture tax credits and incentives for which they may be eligible.

 

 

The information provided in this blog post is for informational purposes only and not for the purpose of providing accounting, legal or tax advice. The information and services ADP provides should not be deemed a substitute for the advice of any such professional. Such information is by nature subject to revision and may not be the most current information available.

 

  1. 26 U.S. Code § 45A – Indian employment credit
  2. IRS FAQs for Indian Tribal Governments regarding the Indian Employment Credit (http://www.irs.gov/Government-Entities/Indian-Tribal-Governments/FAQs-for-Indian-Tribal-Governments-regarding-the-Indian-Employment-Credit)
  3. IRS FAQs for Indian Tribal Governments regarding the Indian Employment Credit – Who is a “qualified employee”? (http://www.irs.gov/Government-Entities/Indian-Tribal-Governments/ITG-FAQ-%234-Answer-Who-is-a–qualified-employee-%3F)
  4. IRS FAQs for Indian Tribal Governments regarding the Indian Employment Credit – What are “qualified wages”? (http://www.irs.gov/Government-Entities/Indian-Tribal-Governments/ITG-FAQ-%236-Answer-What-are–qualified-wages-%3F)

IRS Form 8845, Indian Employment Credit (http://www.irs.gov/pub/irs-pdf/f8845.pdf


TAGS  

One comment on “Indian Employment Credit Provides Incentive to
Hire Tribe Members”

  1. Thanks for sharing your thoughts on business incentives.
    Regards

Leave a comment

Your email address will not be published. Required fields are marked *


1-855-864-1712

Sign Up for
Email Updates

featured webinar