An Indian Employment tax credit can be claimed if you employ part-time or full-time workers who receive more than 50 percent of their wages from services performed on an Indian reservation. The employee must be an enrolled member of an Indian tribe or a spouse of an enrolled member. The employee must also live on or near the reservation on which the services are performed. The credit is 20 percent of the excess of the current qualified wages and qualified employee health insurance costs (not to exceed $20,000) over the sum of the corresponding amounts that were paid or incurred during the calendar year of 1993 and every year after. The aggregate amount of qualified wages and qualified employee health insurance costs taken into account with respect to any employee for any taxable year shall not exceed $20,000. Employees who receive wages exceeding $30,000 are ineligible.
The taxpayer reduced their taxes up to $20,000 by hiring qualified employees. The credit is 20% of up to $20,000 on qualified wages for qualified employees. If the taxpayers 2018 tax liability (without regard to personal credits) is $15,000 and they have no alternative minimum tax liability. Their general business credit is $17,000. In 2018, they can claim a general business credit of $15,000 (their net tax liability reduced by your tentative minimum tax liability of zero). The $2,000 unused credit is carried back to 2017. If it cannot be fully used on an amended 2004 return, it can be carried forward for up to 20 years starting on their 2019 return.
A taxpayer can take a credit of 20% of the excess of eligible employee qualified wages and health insurance costs paid or incurred during the tax year over the amount of these costs paid or incurred during 1993, for the first $20,000 of qualified wages and health insurance costs paid or incurred in a tax year per employee.