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Form 8844 – Empowerment Zone Employment Credit 2020

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Reap the Benefits of Empowerment Zones with Form 8844

As a business owner, you understand the importance of providing tax incentives when it comes to both driving growth and aiding economic development. The Empowerment Zone Employment Credit, available through Form 8844, is one such incentive. By filling out this form, you can claim a federal tax credit for hiring employees in designated empowerment zones (EZs).
Form 8844 - Empowerment Zone Employment Credit - IRS Form Copy - Free download
EZs are distressed urban and rural areas nationwide where the federal government assists economic development through public and private partnerships. The aim is to stimulate economic growth and job creation in these areas by providing tax incentives to businesses.
Through Form 8844, you can access the empowerment zone employment and federal tax credit, which is part of these incentives. This tax credit applies to wages paid to both newly hired and current employees who live and work in an EZ.

Understanding Empowerment Zones

Empowerment zones were created to stimulate economic growth in targeted communities. The federal government provides tax incentives to businesses located in these areas to encourage investment, job creation, and retention of employees.

The empowerment zone initiative, supported by both urban development and rural area strategies, offers a range of benefits for businesses in targeted communities, including the empowerment zone employment credit, available through Form 8844.

A qualified empowerment zone (EZ) employee, for the purposes of the form, is a full-time employee who has his or her principal residence within the empowerment zone. The EZ employment credit applies to qualified zone wages, which include both regular pay and overtime.

Claiming the Empowerment Zone Employment Credit

Empowerment zones are specially designated geographical areas where the federal government assists in economic development through various initiatives and technical assistance. These zones may be urban or rural and are typically regions that could significantly benefit from increased investment and job creation. The aim is to improve the economic conditions of these areas through public and private partnerships, with tax incentives acting as a key tool to attract businesses.

Under the empowerment zone employment credits initiative, businesses can claim the Empowerment Zone Employment Credit for qualified zone wages paid to eligible employees. The credit amount is generally 20% of the employer’s qualified zone wages paid during the tax year to each qualified zone employee. The maximum credit for a tax year is $3,000 per qualified zone employee.

By using tax incentives and offering such a substantial wage credit, the empowerment zone program encourages businesses to hire and retain employees within these zones. This approach not only aids in local economic development but also offers businesses a lucrative tax incentive.

To claim the Empowerment Zone Employment Credit, you need to accurately complete and file it. However, navigating this form and ensuring you meet all the requirements can be challenging without expert help.

Our free, editable form template is designed to simplify this process, ensuring you can maximize your credit while staying compliant with all IRS regulations. We guide you through each step, offering detailed instructions and tips for each section of the form.


Our template is designed following IRS guidelines, ensuring your submission is correct and compliant.

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FAQ About Form 8844: EZ Employment Credit

To qualify for this credit, a business must pay wages to a qualified zone employee who lives and works in an empowerment zone. The wage credit is available for both part-time and full-time employees.
The Department of Housing and Urban Development (HUD) and the Department of Agriculture (USDA) designate and maintain the list of empowerment zones. You can check your business’s eligibility on their websites.
The credit is 20% of the employer’s qualified zone wages paid to each eligible employee up to $15,000 per year. Hence, the maximum credit amount per eligible employee is $3,000 per year.

Yes, you can claim other credits like the work opportunity tax credit along with the credit. However, the same wages cannot be used to calculate multiple credits.

The form, along with the credit, offers a significant opportunity for businesses to decrease their tax liability while contributing to the economic development of distressed rural areas. By retaining and hiring employees who live and work in these zones, businesses can play a crucial role in rejuvenating these communities.

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