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 are certified 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 G, H, or J

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

Schedule K-1 (Form 1041), line 14

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 (2004)

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 page 3.

● Individuals. Enter the amount from Form 1040, line 43

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 47 through 53 8b

Foreign tax credit

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

Credit for fuel from a nonconventional source

Qualified electric vehicle credit (Form 8834, line 20)

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 54; 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

2004
Form 5884 (2004) 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.

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.

To claim the work opportunity 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 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.

Enter on the applicable line the total qualified first-year

wages paid to employees certified as members of a targeted

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

percentage shown on that line.

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)),

● 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,

● Wages for services of replacement workers during a strike

or lockout, and

Do not include wages paid to New York Liberty Zone

business employees on Form 5884. Although the work

opportunity credit includes qualified wages paid to these

employees, the New York Liberty Zone business employee

credit has a different tax liability limit and is figured

separately on Form 8884, New York Liberty Zone Business

Employee Credit.

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.

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).

● Wages used to figure the New York Liberty Zone business

employee credit.

Part I—Current Year Credit

The Working Families Tax Relief Act of 2004 extended the

work opportunity credit to cover individuals who begin work

for the employer before January 1, 2006.

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).

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. 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 certified individual begins work for you. The amount

of qualified wages that may be taken into account for any

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
Form 5884 (2004) 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

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.

● 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; 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.

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 8884, 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.