If an otherwise qualified employee is terminated sooner than one year after the date of initial employment, the credit cannot be claimed for that employee for the tax year the employment is terminated. You may also have to recapture credits allowed in earlier years. These rules DO NOT apply in the following situations:
- The employee voluntarily quits
- The employee is terminated because of misconduct
- The employee becomes disabled. However, if the disability ends before the end of the first year of employment, you must offer reemployment to the former employee
Note: The Indian employment credit has expired for qualified wages and health care costs paid or incurred in tax years beginning after 2017.