Form 5884

Department of the Treasury 

Internal Revenue Service

Work Opportunity Credit

▶ Attach to your tax return.

OMB No. 1545-0219

2011

Attachment 

Sequence No. 77

Name(s) shown on return Identifying number

1 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 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 . $ × 25% (.25) 1a

b Qualified first-year wages of employees who worked 

for you at least 400 hours . . . . . . . . . . $ × 40% (.40) 1b

c Qualified second-year wages of employees certified as 

long-term family assistance recipients . . . . . . $ × 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. Cooperatives, estates, and trusts, go to line 5. Partnerships and S 

corporations, stop here and report this amount on Schedule K. All others, stop here 

and report this amount on Form 3800, line 4b . . . . . . . . . . . . . . . 4

5 Amount allocated to patrons of the cooperative or beneficiaries of the estate or trust 

(see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . 5

6 Cooperatives, estates, and trusts, subtract line 5 from line 4. Report this amount on 

Form 3800, line 4b . . . . . . . . . . . . . . . . . . . . . . . . . 6

General Instructions

Section references are to the Internal Revenue Code unless 

otherwise noted.

What's New

• The work opportunity credit expired for employees not 

certified as qualified veterans who began work after 2011. 

Do not report wages paid or incurred to these employees on 

Form 5884 unless the credit is extended. See www.irs.gov/

form5884 for the latest information about this credit.

• The VOW to Hire Heroes Act of 2011 (a) expanded the 

definition of “qualified veteran” to include certain 

unemployed qualified veterans who begin work after 

November 21, 2011, and before 2013, (b) increased the 

amount of qualified first-year wages used to figure the credit 

for certain qualified veterans, and (c) extended the credit to 

cover all employees certified as qualified veterans who begin 

work after 2011 and before 2013.

• The Act also allows qualified tax-exempt organizations to 

claim the credit against certain employment taxes for 

qualified veterans who begin work after November 21, 2011, 

and before 2013 (see Form 5884-C, Work Opportunity Credit 

for Qualified Tax-Exempt Organizations Hiring Qualified 

Veterans).

• Renewal community designations expired at the end of 

2009. Wages paid or incurred for services performed after 

2009 by a designated community resident or summer youth 

employee who lived in a renewal community may no longer 

qualify for the work opportunity credit unless the designation 

is extended.

• The carryforwards, carrybacks, and passive activity 

limitations for this credit are no longer reported on this form; 

instead, they must be reported on Form 3800, General 

Business Credit.

Purpose of Form

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 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.

Taxpayers, other than partnerships, S corporations, 

cooperatives, estates, or trusts, whose only source of this 

credit is from those pass-through entities, are not required to 

complete or file this form. Instead, they can report this credit 

directly on Form 3800. 

For Paperwork Reduction Act Notice, see instructions. Cat. No. 13570D Form 5884 (2011) 
Form 5884 (2011) Page 2

How To Claim the Credit

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 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 (by June 19, 

2012, for all qualified veterans who begin work after 

November 21, 2011, and before May 22, 2012). 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.

Targeted group employee. An employee is a member of a

targeted group if he or she is a:

• Long-term family assistance recipient,

• 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, 

• SSI recipient, 

• Unemployed veteran (if he or she began working for you 

before 2011), or

• Disconnected youth (if he or she began working for you 

before 2011).

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,

• The employee is your dependent,

• The employee is related to you (see section 51(i)(1)), or

• 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;

• Wages paid to or incurred for a designated community 

resident for services performed while the employee lived 

outside an empowerment zone 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; 

• Wages for services of replacement workers during a strike 

or lockout; and

• First-year wages paid to or incurred for a qualified 

employee if you claim a social security tax exemption for 

wages paid to the employee after March 18, 2010, and 

before January 1, 2011, on your employer's tax return (Form 

941, etc.).

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 an employee certified as a qualified 

veteran is limited to the following amounts.

• $6,000 for a qualified veteran certified as being either (a) a 

member of a family receiving assistance under the 

Supplemental Nutrition Assistance Program (SNAP) (food 

stamps) for at least a 3-month period during the 15-month 

period ending on the hiring date, or (b) unemployed for a 

period or periods totaling at least 4 weeks (whether or not
Form 5884 (2011) Page 3

consecutive) but less than 6 months in the 1-year period 

ending on the hiring date.

• $12,000 for a qualified veteran certified as being entitled to 

compensation for a service-connected disability and either 

(a) hired not more than 1 year after being discharged or 

released from active duty in the U.S. Armed Forces, or (b) 

began work before November 22, 2011, and was 

unemployed for a period or periods totaling at least 6 

months (whether or not consecutive) in the 1-year period 

ending on the hiring date.

• $14,000 for a qualified veteran who began work after 

November 21, 2011, and was certified as being unemployed 

for a period or periods totaling at least 6 months (whether or 

not consecutive) in the 1-year period ending on the hiring 

date.

• $24,000 for a qualified veteran who began work after 

November 21, 2011, and was certified as being entitled to 

compensation for a service-connected disability, and 

unemployed for a period or periods totaling at least 6 

months (whether or not consecutive), in the 1-year period 

ending on the hiring date.

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 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 

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

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.

If the cooperative is subject to the passive activity rules, 

include on line 3 any work opportunity credit from passive 

activities disallowed for prior years and carried forward to 

this year. Complete Form 8810, Corporate Passive Activity 

Loss and Credit Limitations, to determine the allowed credit 

that must be allocated to patrons. For details, see the 

Instructions for Form 8810. 

Estates and trusts. Allocate the work opportunity credit on 

line 4 between the estate or trust and the beneficiaries in the 

same proportion as income was allocated and enter the 

beneficiaries' share on line 5.

If the estate or trust is subject to the passive activity rules, 

include on line 3 any work opportunity credit from passive 

activities disallowed for prior years and carried forward to 

this year. Complete Form 8582-CR, Passive Activity Credit 

Limitations, to determine the allowed credit that must be 

allocated between the estate or trust and the beneficiaries. 

For details, see the Instructions for Form 8582-CR.

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 . . . . . . . . . . 3 hr., 6 min.

Learning about the law 

or the form . . . . . . . . . . . . 1 hr., 15 min.

Preparing and sending 

the form to the IRS . . . . . . . . . 2 hr., 34 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.