5884 Work Opportunity Credit

Form

5884

Department of the Treasury
Internal Revenue Service

OMB No. 1545-0219

Work Opportunity Credit
©

2008

Attachment
Sequence No.

Attach to your tax return.

Name(s) shown on return

1

77

Identifying number

Enter on the applicable line below the total qualified first- or second-year wages paid or incurred
during the tax year, and multiply by the percentage shown, for services of employees who are
certified (if required) as members of a targeted group.
a Qualified first-year wages of employees who worked for you at least
120 hours but fewer than 400 hours
$

3 25% (.25)

1a

b Qualified first-year wages of employees who worked for you at
least 400 hours
$

3 40% (.40)

1b

c Qualified second-year wages of employees certified as long-term
family assistance recipients
$

3 50% (.50)

1c

2

Add lines 1a, 1b, and 1c. See instructions for the adjustment you must make to salaries and wages

2

3

Work opportunity credit from partnerships, S corporations, cooperatives, estates, and trusts

3

4

Add lines 2 and 3. Partnerships and S corporations, report this amount on Schedule K; all others,
go to line 5

4

5

Work opportunity credit included on line 4 from passive activities (see instructions)

5

6

Subtract line 5 from line 4

6

7

Work opportunity credit allowed for 2008 from a passive activity (see instructions)

7

8

Carryforward of any work opportunity credit that originated in a tax year that began after 2006 and
carryforward from 2007 of the New York Liberty Zone business employee credit

8

Carryback of the work opportunity credit from 2009 (see instructions)

9

Add lines 6 through 9. Cooperatives, estates, and trusts, continue on to line 11. All others, report
this amount on Form 3800, line 29b

10

Amount allocated to patrons of the cooperative or beneficiaries of the estate or trust (see
instructions)

11

Cooperatives, estates, and trusts, subtract line 11 from line 10. Report this amount on Form 3800,
line 29b

12

9
10

11

12

General Instructions

Purpose of Form

Section references are to the Internal Revenue Code unless
otherwise noted.

Use Form 5884 to claim the work opportunity credit for
qualified first- or second-year wages you paid to or incurred
for targeted group employees during the tax year. Your
business does not have to be located in an empowerment
zone, renewal community, or rural renewal county to qualify
for this credit.
You can claim or elect not to claim the work opportunity
credit any time within 3 years from the due date of your
return on either your original return or an amended return.

What’s New
● The period for hiring a Hurricane Katrina employee is
extended from a 2- to a 4-year period beginning on August 28,
2005.
● Food stamp recipients are now referred to as Supplemental
Nutritional Assistance Program (SNAP) recipients.
● The tax liability limit is no longer figured on this form;
instead, it must be figured on Form 3800, General Business
Credit.

For Paperwork Reduction Act Notice, see instructions.

How To Claim the Credit
Generally, you must request and be issued a certification for
each employee from the state employment security agency
(SESA). The certification proves that the employee is a
Cat. No. 13570D

Form

5884

(2008)

Form 5884 (2008)

member of a targeted group. You must receive the
certification by the day the individual begins work or
complete Form 8850, Pre-Screening Notice and Certification
Request for the Work Opportunity Credit, on or before the
day you offer the individual a job.
If you complete Form 8850, it must be signed by you and
the individual and submitted to the SESA by the 28th
calendar day after the individual begins work. If the SESA
denies the request, it will provide a written explanation of the
reason for denial. If a certification is revoked because it was
based on false information provided by the worker, wages
paid or incurred after the date you receive the notice of
revocation do not qualify for the credit.
Hurricane Katrina employee. A Hurricane Katrina employee
is an employee who had a main home in the core disaster
area on August 28, 2005, and, within a 4-year period
beginning on that date, was hired for a job whose principal
place of employment is in the core disaster area. The
certification requirements described above do not apply to
Hurricane Katrina employees. Instead, the worker must show
the employer reasonable evidence that the worker is a
Hurricane Katrina employee. An employer may use Form
8850 to accept reasonable evidence that the worker is a
Hurricane Katrina employee. If the employer discovers that
the worker is not a Hurricane Katrina employee, wages paid
or incurred after the date of discovery will not qualify for the
credit.
Targeted group employee. An employee is a member of a
targeted group if he or she is a:
● Hurricane Katrina employee,
● Long-term family assistance recipient hired after December
31, 2006 (if hired before January 1, 2007, see Form 8861,
Welfare-to-Work Credit),
● Qualified recipient of Temporary Assistance for Needy
Families (TANF),
● Qualified veteran,
● Qualified ex-felon,
● Designated community resident,
● Vocational rehabilitation referral,
● Summer youth employee,
● SNAP recipient, or
● SSI recipient.
See the Instructions for Form 8850 and section 51(d) for
details and restrictions.

Qualified Wages
Wages qualifying for the credit generally have the same
meaning as wages subject to the Federal Unemployment Tax
Act (FUTA). If the work performed by any employee during
more than half of any pay period qualifies under FUTA as
agricultural labor, that employee’s wages subject to social
security and Medicare taxes are qualified wages. For a special
rule that applies to railroad employees, see section 51(h)(1)(B).
Qualified wages for any employee must be reduced by the
amount of any work supplementation payments you received
under the Social Security Act for the employee.
The amount of qualified wages for any employee is zero if:
● The employee did not work for you for at least 120 hours,
● The employee worked for you previously, unless the
employee is a Hurricane Katrina employee who was not in
your employment on August 28, 2005, and this is your first
hire of the employee after that date,
● The employee is your dependent,
● The employee is related to you (see section 51(i)(1)), or

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2

● 50% or less of the wages the employee received from you
were for working in your trade or business.
Qualified wages do not include:
● Wages paid to or incurred for any employee during any
period for which you received payment for the employee from
a federally funded on-the-job training program;
● Wages paid to or incurred for a summer youth employee for
services performed while the employee lived outside an
empowerment zone or renewal community;
● Wages paid to or incurred for a designated community
resident for services performed while the employee lived
outside an empowerment zone, renewal community, or rural
renewal county;
● Wages paid to or incurred for services performed by a
summer youth employee before or after any 90-day period
between May 1 and September 15; and
● Wages for services of replacement workers during a strike
or lockout.

Member of Controlled Group or Business
Under Common Control
For purposes of figuring the credit, all members of a controlled
group of corporations (as defined in section 52(a)) and all
members of a group of businesses under common control (as
defined in section 52(b)), are treated as a single taxpayer. As a
member, compute your credit based on your proportionate
share of qualified wages giving rise to the group’s work
opportunity credit. Enter your share of the credit on line 2.
Attach a statement showing how your share of the credit was
figured, and enter “See attached” next to the entry space for
line 2.

Specific Instructions
Current Year Credit
Lines 1a, 1b, and 1c
Enter on the applicable line and multiply by the percentage
shown the total qualified first- or second-year wages paid to
or incurred for employees who are members of a targeted
group. Qualified first-year wages are qualified wages you paid
to or incurred for work performed during the 1-year period
beginning on the date the individual begins work for you.
Qualified second-year wages are qualified wages you paid to
or incurred for certified long-term family assistance recipients
for work performed during the 1-year period beginning on the
day after the last day of the 1-year wage period.
The amount of qualified first-year wages and the amount of
qualified second-year wages that may be taken into account
for any employee certified as a long-term family assistance
recipient is limited to $10,000 per year. The amount of
qualified first-year wages that may be taken into account for
any employee certified as a qualified veteran entitled to
compensation for a service-connected disability and who,
during the 1-year period ending on the hiring date, was either
(a) discharged or released from active duty in the U.S. Armed
Forces, or (b) unemployed for a period or periods totaling at
least 6 months, is limited to $12,000. The amount of qualified
first-year wages that may be taken into account for any
employee certified as a summer youth employee is limited to
$3,000. The amount of qualified first-year wages that may be
taken into account for an employee certified (if required) as a
member of any other targeted group is $6,000.
Successor employer. For successor employers, the 1- or
2-year period begins on the date the employee began work for
the previous employer and any qualified first- or second-year
wages paid or incurred by the successor employer are

Form 5884 (2008)

reduced by the qualified first or second-year wages paid or
incurred by the previous employer. See section 51(k)(1) and
Regulations section 1.51-1(h).
A successor employer is an employer that acquires
substantially all of the property used in a trade or business (or
a separate unit thereof) of another employer (the previous
employer) and immediately after the acquisition, the successor
employs in his or her trade or business an individual who was
employed immediately prior to the acquisition in the trade or
business of the previous employer.

Line 2
In general, you must reduce your deduction for salaries and
wages by the amount on line 2. This is required even if you
cannot take the full credit this year and must carry part of it
back or forward. If you capitalized any costs on which you
figured the credit, reduce the amount capitalized by the credit
attributable to these costs.

Line 3
Enter the amount of credit that was allocated to you as a
partner, shareholder, patron of a cooperative, or beneficiary.

Line 5
Enter the amount included on line 4 that is from a passive
activity. Generally, a passive activity is a trade or business in
which you did not materially participate. Rental activities are
generally considered passive activities, whether or not you
materially participate. For details, see Form 8582-CR, Passive
Activity Credit Limitations (for individuals, estates, and trusts),
or Form 8810, Corporate Passive Activity Loss and Credit
Limitations (for corporations).

Line 7
Enter the passive activity work opportunity credit allowed for
2008 from Form 8582-CR or Form 8810.

Line 8
Use line 8 to show any carryforward of the work opportunity
credit from 2007. For carryforwards of the credit from years
prior to 2007, show such carryforwards on line 6 of Form
3800.
Also use line 8 to show any carryforward from 2007 of the
New York Liberty Zone business employee credit. On the
dotted line next to line 8, enter “From Form 8884” and the
amount.

Line 9
Use line 9 to show any carryback if you amend your 2008
return to carry back an unused work opportunity credit from
2009.

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3

Line 11
Cooperatives. A cooperative described in section 1381(a)
must allocate to its patrons the credit in excess of its tax
liability limit. Therefore, to figure the unused amount of the
credit allocated to patrons, the cooperative must first figure its
tax liability. While any excess is allocated to patrons, any
credit recapture applies as if the cooperative had claimed the
entire credit.
Estates and trusts. Allocate the work opportunity credit on
line 10 between the estate or trust and the beneficiaries in the
same proportion as income was allocated and enter the
beneficiaries share on line 11.
Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue laws
of the United States. You are required to give us the
information. We need it to ensure that you are complying with
these laws and to allow us to figure and collect the right
amount of tax.
You are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books
or records relating to a form or its instructions must be
retained as long as their contents may become material in the
administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by
section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated burden
for individual taxpayers filing this form is approved under OMB
control number 1545-0074 and is included in the estimates
shown in the instructions for their individual income tax return.
The estimated burden for all other taxpayers who file this form
is shown below.
Recordkeeping
5 hr., 1 min.
Learning about the law
or the form
1 hr.
Preparing and sending
the form to the IRS
1 hr., 7 min.
If you have comments concerning the accuracy of these
time estimates or suggestions for making this form simpler,
we would be happy to hear from you. See the instructions for
the tax return with which this form is filed.