OMB No. 1545-0219

Form 5884 Work Opportunity Credit

Department of the Treasury

Internal Revenue Service  Attach to your tax 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 began work for you before the applicable

date in the instructions, are certified (if required) as members of a targeted group, and:

1a

2 Add lines 1a and 1b. You must subtract this amount from your deduction for salaries and wages 2

If you are a— Then enter the total of the current year credits from—

Schedule K-1 (Form 1120S), box 13, code F, G, or J

Schedule K-1 (Form 1065), box 15, code F, G, or J

Schedule K-1 (Form 1041), box 13, code F

Written statement from cooperative

a Shareholder

b Partner

c Beneficiary

d Patron

Work

opportunity

credits from

pass-through

entities:

3

3

Current year credit. Add lines 2 and 3. (S corporations, partnerships, estates, trusts,

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

instructions.)

4

4

Allowable Credit (See Who must file Form 3800 to find out if you complete Part II or file Form 3800.)

Form 5884 (2005)

Part I

Part II



Cat. No. 13570D

Worked for you at least 120 hours but fewer than 400 hours $  25% (.25)

Worked for you at least 400 hours $  40% (.40)

a

b 1b

For Paperwork Reduction Act Notice, see instructions.

● Individuals. Enter the amount from Form 1040, line 44

5

Corporations. Enter the amount from Form 1120, Schedule J, line 3; Form 1120-A,

Part I, line 1; or the applicable line of your return

●

●

8a 8a

b Credits from Form 1040, lines 48 through 54 8b

Foreign tax credit

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

Nonconventional source fuel credit (Form 8907, line 23)

Other specified credits (see instructions)

Add lines 8a through 8e 8f

Net income tax. Subtract line 8f from line 7. If zero, skip lines 10 through 13 and enter -0- on line 14 9

6 Alternative minimum tax:

● Individuals. Enter the amount from Form 6251, line 35

● Corporations. Enter the amount from Form 4626, line 14 6

● Estates and trusts. Enter the amount from Form 1041, Schedule I, line 56

9

Tentative minimum tax (see instructions)

10 10

Enter 25% (.25) of the excess, if any, of line 10 over $25,000 (see instructions)

12

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

13 13

Credit allowed for the current year. Enter the smaller of line 4 or line 14 here and on Form

1040, line 55; Form 1120, Schedule J, line 6d; Form 1120-A, Part I, line 2; Form 1041, Schedule

G, line 2c; or the applicable line of your return. If line 14 is smaller than line 4, see instructions 15



5 Regular tax before credits:

7 Add lines 5 and 6 7

11

Enter the greater of line 11 or line 12

11

12

c

d

e

8c

8d

Estates and trusts. Enter the sum of the amounts from Form 1041, Schedule G, lines 1a

and 1b, or the amount from the applicable line of your return

Net regular tax. Subtract line 8f from line 5. If zero or less, enter -0-

14 14



15

8e

f

2005
Form 5884 (2005) Page 2

● Qualified food stamp recipient, or

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

Specific Instructions

Targeted group employee. An employee is a member of a

targeted group if he or she is a:

● Qualified recipient of Temporary Assistance for Needy Families

(TANF),

● Qualified veteran,

● Qualified ex-felon,

● High-risk youth,

● Vocational rehabilitation referral,

● Qualified summer youth employee,

Lines 1a and 1b

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

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

Section references are to the Internal Revenue Code unless

otherwise noted.

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.

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 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 and Welfare-to-Work Credits, on or before the day

you offer the individual a job.

How To Claim the Credit

Purpose of Form

Use Form 5884 to claim the work opportunity credit for qualified

first-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, enterprise community, or

renewal community to qualify for this credit.

General Instructions

If you complete Form 8850, it must be signed by you and the

individual and submitted to the SESA by the 21st 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 after the date

you receive the notice of revocation do not qualify for the credit.

● Qualified SSI recipient.

Note. The “applicable date” is generally December 31, 2005

(see Qualified Wages, above). That is, the credit generally is

not allowed with respect to wages for services of employees

who began work for you after December 31, 2005. An

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)),

● 50% or less of the wages the employee received from you

were for working in your trade or business, or

● You use any of the employee’s wages to figure the

welfare-to-work credit for the current year.

Qualified wages do not include:

● Wages paid to any employee during any period for which you

received payment for the employee from a federally funded

on-the-job training program;

● Wages paid or incurred to a high-risk or qualified summer

youth employee for services performed while the employee lived

outside an empowerment zone, enterprise community, or

renewal community;

● Wages paid or incurred for services performed by a qualified

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.

However, if you use any wages of an employee to figure the

welfare-to-work credit for any tax year, the employee is not

treated as a member of a targeted group for that year.

Part I—Current Year Credit

The definition of “targeted group employee” has been expanded

to include Hurricane Katrina employees. A Hurricane Katrina

employee is:

Qualified first-year wages. Qualified first-year wages are wages

you paid or incurred for work performed during the 1-year period

beginning on the date the targeted group member begins work

for you. The amount of qualified wages that may be taken into

account for any employee is limited to $6,000 ($3,000 for a

qualified summer youth employee). Wages qualifying for the

credit generally have the same meaning as wages (excluding

tips) 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, the first

$6,000 of that employee’s wages subject to social security and

Medicare taxes qualify. 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.

What’s New

● A person who, on August 28, 2005, had a main home in the

core disaster area and, within a two-year period beginning on

that date, is hired to perform services principally in the core

disaster area; or

● A person who, on August 28, 2005, had a main home in the

core disaster area, was displaced from the main home as a

result of Hurricane Katrina, and is hired during the period

beginning on August 28, 2005, and ending on December 31,

2005, for a job located outside the core disaster area.

Special rules that apply to members of this new targeted

group are discussed below. For information about the core

disaster area, see Publication 4492, Information for Taxpayers

Affected by Hurricanes Katrina, Rita, and Wilma.

Hurricane Katrina employee. 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 (as

defined above). 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 after the date of

discovery will not qualify for the credit.

● Hurricane Katrina employee,

Qualified Wages

The credit is not allowed with respect to wages for services of

employees who began work for you after December 31, 2005.

Hurricane Katrina exception. You can claim the credit after

2005 only for wages paid to Hurricane Katrina employees. To

qualify, wages must be paid to a Hurricane Katrina employee

who had a main home in the core disaster area on August 28,

2005, and, within a two-year period beginning on that date, was

hired for a job whose principal place of employment is in the

core disaster area.
Form 5884 (2005) Page 3

Line 15

Line 11

Line 12

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.

Recordkeeping 5 hr., 58 min.

Learning about the law

or the form 1 hr., 12 min.

Preparing and sending

the form to the IRS 1 hr., 20 min.

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.

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.

● Individuals: Form 6251, line 33.

● Corporations: Form 4626, line 12.

● Estates and trusts: Form 1041, Schedule I, line 54.

If you cannot use all of the credit because of the tax liability limit

(line 14 is smaller than line 4), carry the unused credit back 1

year then forward up to 20 years. See the instructions for Form

3800 for details.

See section 38(c)(5) for special rules that apply to married

couples filing separate returns, controlled corporate groups,

regulated investment companies, real estate investment trusts,

and estates and trusts.

Although you may not owe alternative minimum tax (AMT), you

generally must still compute the tentative minimum tax (TMT) to

figure your credit. For a small corporation exempt from the AMT

under section 55(e), enter zero. Otherwise, complete and attach

the applicable AMT form or schedule. Enter on line 12 the TMT

from the line shown below.

Part II—Allowable Credit

Line 4

Estates and trusts. Allocate the credit on line 4 between the

estate or trust and the beneficiaries in proportion to the income

allocable to each. On the dotted line next to line 4, the estate or

trust should enter its part of the total credit. Label it “1041

Portion” and use this amount in Part II (or Form 3800, if required)

to figure the credit to claim on Form 1041.

S corporations and partnerships. Allocate the credit among the

shareholders or partners. Attach Form 5884 to the return and on

Schedule K-1 show the credit for each shareholder or partner.

Electing large partnerships include this credit in “general

credits.”

Cooperatives. Most tax-exempt organizations cannot take the

credit. However, a cooperative described in section 1381(a)

takes the credit to the extent it has tax liability. Any excess is

shared among its patrons.

Who must file Form 3800. You must file Form 3800 if you have:

Regulated investment companies and real estate investment

trusts. Reduce the allowable credit to the company’s or trust’s

ratable share of the credit. For details, see Regulations section

1.52-3(b).

● A work opportunity credit from a passive activity;

● More than one credit included in the general business credit

(other than a credit from Form 8844, Form 6478, or Section B of

Form 8835); or

● A carryback or carryforward of any of those credits.

The credit allowed for the current year may be limited based on

your tax liability. Use Part II to figure the allowable credit unless

you must file Form 3800, General Business Credit.

See the instructions for Form 3800 to find out which credits

are included in the general business credit.

Line 3

Enter the amount of credit that was allocated to you as a

shareholder, partner, beneficiary, or patron of a cooperative.

● You used the full absorption method of inventory costing,

which required you to reduce your basis in inventory for the

credit.

If either of the above exceptions applies, attach a statement

explaining why the amount on line 2 differs from the amount by

which you reduced your deduction.

● If you capitalized any salaries and wages on which you figured

the credit, reduce your depreciable basis by the amount of the

credit on those salaries and wages.

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. However, the following exceptions apply.

Special instructions for controlled group members. The group

member proportionately contributing the most qualified 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 and

1b and enter its share of the group credit on line 2. Each

member then completes lines 3, 4, and 5 through 15 (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.

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/her trade or business an individual who was

employed immediately prior to the acquisition in the trade or

business of the previous employer.

Include on line 8e any amounts claimed on:

● Form 8834, Qualified Electric Vehicle Credit, line 20,

● Form 8910, Alternative Motor Vehicle Credit, line 18, and

● Form 8911, Alternative Fuel Vehicle Refueling Property Credit,

line 19.

Line 8e

Successor employer. For successor employers, the 1-year

period begins on the date the employee first began work for

the previous employer and any qualified first-year wages paid

by the successor employer are reduced by the qualified

first-year wages paid by the previous employer. See section

51(k)(1) and Regulations section 1.51-1(h).

Enter on the applicable line the total qualified first-year

wages paid to employees who are members of a targeted

group. Multiply the wages you enter on each line by the

percentage shown on that line.

exception applies for Hurricane Katrina employees (see

Hurricane Katrina exception, earlier).