85R: Recapture of Idaho Small Employer New Jobs Tax Credit and Instructions 2024 (2024)
Idaho · Idaho Tax Commission · Used for tax years 2024
Form 85R calculates the increase in tax and reduction in credit carryover from recapture of the Idaho Small Employer New Jobs Tax Credit. It also reports credit recapture passed through from S corporations, partnerships, trusts, or estates.
Who files this form
Use Form 85R to calculate recapture of the Idaho small employer new jobs tax credit if you claimed the credit in an earlier year and either:
- Did not meet the tax incentive criteria listed below.
- Did not maintain the level of qualifying employees for which you earned the credit for five full years after the project period ended.
The tax incentive criteria are:
- At least $500,000 in capital investment in new plant and building facilities.
- At least 10 new employees, each earning at least $19.23 per hour and receiving health benefits.
- For new employment increases above those 10 employees, average wages of at least $15.50 per hour worked for the additional new employees.
S corporations, partnerships, trusts, and estates with credit subject to recapture must complete lines 1 through 7. Shareholders, partners, and beneficiaries reporting only recapture passed through from an entity skip lines 1 through 7 and begin on line 8.
When it's due
The tax year 2024 form states that the project period ends when the project's new plant and building facilities are placed in service, but no later than December 31, 2030. Use the earlier date as the project period end date.
The supplied text does not state a filing due date for Form 85R.
What you'll need
Have these forms and records available, as applicable:
- Form 85 for each year the credit was earned: Line 1 provides the average number of qualifying employees, and line 10 provides the credit earned.
- Project and employment records: You need the project period end date and the average number of qualifying employees working primarily at the project site during the recapture period.
- Form ID K-1 for pass-through recapture: The recapture amount is reported in Part VII, line 49, or Part XI, line 74 for Composite/ABE. The entity must include details about the years the credit was originally earned in Part XII, Supplemental Information.
- A separate calculation of unused credit: If you did not use all the original credit, calculate the unused portion on a separate sheet for line 11.
Enter the final recapture amount on Form 44, Part II, line 5.
Common mistakes
- Using the worksheet when the tax incentive criteria were not met. Do not complete the Recapture Worksheet in that case. Enter 100% on line 4, leave line 5 blank, and continue to line 6.
- Choosing a later year for employee-level recapture. Use the earliest year in the recapture period when the average number of qualifying employees fell below the number on line 2.
- Including certain recipients' recapture on line 10. Do not include recapture for shareholders, partners, or beneficiaries whose tax you are paying.
- Entering too much unused credit on line 11. Do not enter more than line 9. The amount on line 11 reduces the credit carryover available to the current year.
- Reducing the current year's credit by the recapture amount. Do not subtract line 13 from the current year's credit on Form 85. Report it on Form 44, Part II, line 5.
Questions people ask
What does Form 85R calculate?
It calculates the increase in tax and the reduction in credit carryover from recapture of the Idaho small employer new jobs tax credit. Recapture of credits claimed in prior years increases tax in the recapture year. Recapture of credits not claimed in prior years reduces the carryover available to the current year.
How much credit is recaptured if I did not meet the tax incentive criteria?
You must recapture all the credit claimed in earlier years. Enter 100% on line 4 and do not use the Recapture Worksheet.
What percentages apply if I did not maintain the required employee level?
The worksheet lists 100% for the first year after the project period ends, 80% for the second year, 60% for the third year, 40% for the fourth year, and 20% for the fifth year. Use the percentage for the first year when the average number of qualifying employees fell below the number on line 2.
Do I pay recapture tax on credit I never used?
No. If you did not use part of the original credit in the year earned or in a carryover year, that unused portion does not create recapture tax. Calculate it on a separate sheet and enter it on line 11, limited to the amount on line 9. It reduces your available carryover.
What if my only recapture comes from a pass-through entity?
Skip lines 1 through 7 and begin on line 8. Use the recapture information provided by the S corporation, partnership, trust, or estate on Form ID K-1.