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:

1a

Current year credit. Add lines 1a and 1b. 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 (1999)

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 15)

c 6c

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

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

a

b 1b

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

i

6h

For Paperwork Reduction Act Notice, see page 4.

k

l

Education credits (Form 8863, line 18)

Mortgage interest credit (Form 8396, line 11)

6j

6k

1999
Form 5884 (1999) 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 at any time when

employed earlier. An employee who began work for you after

June 30, 1999, must not have worked for you previously.

● 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 its successor program, 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. Enter on the applicable line the total

qualified first-year wages paid to employees certified as

members of a targeted group, based on 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.

● 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.

● 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 and 1b 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.

A Change To Note

The Tax Relief Extension Act of 1999 extended the work

opportunity credit to cover individuals who begin work for the

employer before January 1, 2002.
Form 5884 (1999) Page 4

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. The exceptions to this rule

are:

Who Must File Form 3800

● You capitalized any salaries and wages on which you

figured the credit. In this case, reduce your depreciable basis

by the amount of the credit on those salaries and wages.

● You used the full absorption method of inventory costing

that required you to reduce your basis in inventory for the

credit.

If either of the above exceptions applies, attach a

statement explaining why the line 2 amount differs from the

amount by which you reduced your deduction.

Line 3. Enter the amount of credit that was allocated to you

as a shareholder, partner, beneficiary, or patron of a

cooperative.

Line 4. If you have a credit from a passive activity, stop here

and go to Form 3800.

Estates and trusts. The credit on line 4 is allocated

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. Prorate the credit on

line 4 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; but a cooperative described in section 1381(a)

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

shared among its patrons.

Line 14. If you cannot use part of the credit because of the

tax liability limit (line 13 is smaller than line 4), carry it back 1

year, then forward 20 years. See the separate Instructions

for Form 3800 for details.

Line 11. See section 38(c)(3) 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.

Line 10. 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 10 the TMT from the line

shown below.

● More than one of the credits included in the general

business credit listed below,

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.

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).

Recordkeeping 6 hr., 27 min.

Learning about the law

or the form 1 hr.

Preparing and sending

the form to the IRS 1 hr., 8 min.

The time needed to complete and file this form will vary

depending on individual circumstances. The estimated

average time is:

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 general business credit consists of the following

credits:

● Investment (Form 3468),

● Work opportunity (Form 5884),

● Alcohol used as fuel (Form 6478),

● Research (Form 6765),

● Low-income housing (Form 8586),

● Enhanced oil recovery (Form 8830),

● Renewable electricity production (Form 8835),

● Indian employment (Form 8845),

● Employer social security and Medicare taxes paid on

certain employee tips (Form 8846),

● Contributions to selected community development

corporations (Form 8847), and

The empowerment zone employment credit (Form 8844),

while a component of the general business credit, is figured

separately on Form 8844 and is never carried to Form 3800.

● Disabled access (Form 8826),

● Trans-Alaska pipeline liability fund.

● Orphan drug (Form 8820),

● Welfare-to-work (Form 8861),

● Individuals: Form 6251, line 26.

● Corporations: Form 4626, line 13.

● Estates and trusts: Form 1041, Schedule I, line 37.

● A carryback or carryforward of any of the credits,

● A credit from passive activity, or

● General credits from an electing large partnership

(Schedule K-1, Form 1065-B).

Complete Form 3800, General Business Credit, instead of

completing Part II of Form 5884, to figure the tax liability limit

for the credit, if for this year you have: