OMB No. 1545-0219

Form 5884 Work Opportunity Credit

Department of the Treasury

Internal Revenue Service © Attach to your return. Attachment

Sequence No. 77

Name(s) shown on return Identifying number

Current Year Credit (Members of a controlled group, see instructions.)

1 Enter the total qualified first-year wages paid or incurred during the tax year and multiply by the

percentage shown for services of employees who are certified as members of a targeted group and

who began work for you:

1a

Current year credit. Add lines 1a, 1b, and 1c. You must subtract this amount from your deduction for

salaries and wages

2

2

If you are a— Then enter total of current year work opportunity credit(s) from—

Schedule K-1 (Form 1120S), lines 12d, 12e, or 13

Schedule K-1 (Form 1065), lines 12c, 12d, or 13

Schedule K-1 (Form 1041), line 14

Written statement from cooperative

a Shareholder

b Partner

c Beneficiary

d Patron

Work opportunity

credits from

flow-through

entities

3

3

Total current year work opportunity credit. Add lines 2 and 3. (S corporations, partnerships, estates,

trusts, cooperatives, regulated investment companies, and real estate investment trusts, see

instructions.)

4

4

Tax Liability Limit (See Who Must File Form 3800 to find out if you complete Part II or file Form 3800.)

Form 5884 (1998)

Part I

Part II

%

Cat. No. 13570D

● Individuals. Enter amount from Form 1040, line 40

● Corporations. Enter amount from Form 1120, Schedule J, line 3 (or Form 1120-A, Part I, line 1) 5

● Other filers. Enter regular tax before credits from your return

6a Credit for child and dependent care expenses (Form 2441, line 9) 6a

b Credit for the elderly or the disabled (Schedule R (Form 1040), line 20) 6b

6e

Foreign tax credit

e

6f f

Possessions tax credit (Form 5735, line 17 or 27)

g 6g

6i

h

j Credit for fuel from a nonconventional source

Qualified electric vehicle credit (Form 8834, line 19)

6l Add lines 6a through 6k

7 Net regular tax. Subtract line 6l from line 5 7

8 Alternative minimum tax:

● Individuals. Enter amount from Form 6251, line 28

● Corporations. Enter amount from Form 4626, line 15 8

● Estates and trusts. Enter amount from Form 1041, Schedule I, line 39

10 Tentative minimum tax (see instructions) 10

11 If line 7 is more than $25,000, enter 25% (.25) of the excess (see

instructions)

13 Subtract line 12 from line 9. If zero or less, enter -0- 13

14 Work opportunity credit allowed for current year. Enter the smaller of line 4 or line 13 here and

on Form 1040, line 47; Form 1120, Schedule J, line 4d; Form 1120-A, Part I, line 2a; Form 1041,

Schedule G, line 2c; or the applicable line of your return 14

%

%

Child tax credit (Form 1040, line 43)

d 6d

5 Regular tax before credits:

9 Net income tax. Add lines 7 and 8 9

12 Enter the greater of line 10 or line 11 12

11

Adoption credit (Form 8839, line 14)

c 6c

Before October 1, 1997 $ 3 35% (.35)

After September 30, 1997, and before July 1, 1999, and worked

at least 120 hours but fewer than 400 hours $ 3 25% (.25)

After September 30, 1997, and before July 1, 1999, and worked

at least 400 hours $ 3 40% (.40)

a

b

c

1b

1c

District of Columbia first-time homebuyer credit (Form 8859, line 11)

i

6h

For Paperwork Reduction Act Notice, see page 4.

1998

k

l

Education credits (Form 8863, line 18)

Mortgage interest credit (Form 8396, line 11)

6j

6k
Form 5884 (1998) Page 3

● Qualified food stamp recipient.

See Form 8850 and section 51(d) for details and

restrictions.

● More than half the wages received from you must be for

working in your trade or business.

● You may not claim a credit on wages that were paid to any

employee during any period for which you received payment

for the employee from a federally funded on-the-job training

program.

● The employee cannot be your relative or dependent. See

section 51(i) for other restrictions.

● The employee cannot be your rehired employee if he or

she was not a targeted group member when employed

earlier.

● For individuals who began work before October 1, 1997,

the employee must have worked for you for at least 180

days or completed at least 400 hours of service.

● The wages cannot be for services of replacement workers

during a strike or lockout.

Qualified first-year wages are qualified wages for work

performed during the 1-year period beginning on the date

the individual begins work for you. The following rules apply

in determining qualified wages:

● Only the first $6,000 of wages paid or incurred during the

tax year for each employee are taken into account.

Specific Instructions

An employee is a member of a targeted group if he or she

is a:

● Qualified recipient of aid to families with dependent

children (AFDC) or successor program.

● Qualified veteran.

● Qualified ex-felon.

● High-risk youth.

● Vocational rehabilitation referral.

● Qualified summer youth employee.

Lines 1a through 1c. Enter on the applicable line (1a, 1b, or

1c) the total qualified first-year wages paid to employees

certified as members of a targeted group, based on when the

employee began work and the number of hours that

employee worked for you. Multiply the wages you enter on

each line by the percentage shown on that line.

Note: If you only have a credit allocated to you from a

flow-through entity, skip lines 1 and 2 and go to line 3.

● Wages qualifying for the credit generally have the same

meaning as wages subject to the Federal Unemployment Tax

Act (FUTA). For agricultural employees, if the work performed

by any employee during more than half of any pay period

qualifies under FUTA as agricultural labor, the first $6,000 of

that employee’s wages subject to social security and

Medicare taxes are taken into account. For a special rule that

applies to railroad employees, see section 51(h)(1)(B).

● For each qualified summer youth employee, wages are

limited to those paid or incurred for any 90-day period

between May 1 and September 15 and may not exceed

$3,000. You cannot claim a credit for an employee who was

your employee in a prior period.

● You cannot include wages paid or incurred to a high-risk

or qualified summer youth employee for services performed

while the employee lived outside an empowerment zone or

enterprise community.

Section references are to the Internal Revenue Code.

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 on an amended return.

To claim the work opportunity credit, the employer 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 member of a

targeted group. The employer must receive the certification

by the day the individual begins work, or must complete

Form 8850, Pre-Screening Notice and Certification Request

for the Work Opportunity and Welfare-to-Work Credits, by the

day the employer offers the individual a job.

How To Claim the Credit

Purpose of Form

Use Form 5884 if you had targeted group employees and

claim the work opportunity credit for wages you paid or

incurred to them during the tax year.

A Change To Note

The Tax and Trade Relief Extension Act of 1998 extended the

work opportunity credit for 1 year to cover individuals who

begin work for the employer before July 1, 1999.

● For individuals who began work after September 30, 1997,

and before July 1, 1999, the employee must have worked for

you for at least 120 hours. For employees who have worked

at least 120 hours but fewer than 400 hours, the credit rate

is 25 percent. For employees who have worked at least 400

hours, the credit rate is 40 percent.

General Instructions

If the employer completes Form 8850, it must be signed by

the individual and the employer and submitted to the SESA

by the 21st day after the individual begins work. If the SESA

denies a certification 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 after the date the notice of

revocation is received by the employer do not qualify for the

credit.

● Qualified SSI recipient (for individuals who begin work after

September 30, 1997).

● Any work supplementation payments you received under

the Social Security Act reduce the amount of wages

qualifying for the credit.

Special instructions for controlled group members. The

group member proportionately contributing the most

first-year wages figures the group credit in Part I and skips

Part II. See sections 52(a) and 1563. On separate Forms

5884, that member and every other member of the group

should skip lines 1a through 1c and enter its share of the

group credit on line 2. Each member then completes lines 3,

4, and 5 through 14 (or Form 3800, if required) on its

separate form. Each member must attach to its Form 5884 a

schedule showing how the group credit was divided among

all the members. The members share the credit in the same

proportion that they contributed qualifying wages.

● You cannot claim the work opportunity credit with respect

to the wages of any employee that you use to figure the

welfare-to-work credit.