Form 5884

Department of the Treasury 

Internal Revenue Service

Work Opportunity Credit

▶ Attach to your tax return.

▶ Information about Form 5884 and its instructions is at www.irs.gov/form5884.

OMB No. 1545-0219

2012

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

For Paperwork Reduction Act Notice, see instructions. Cat. No. 13570D Form 5884 (2012) 
Form 5884 (2012) Page 2

General Instructions

Section references are to the Internal Revenue Code 

unless otherwise noted.

Future Developments

For the latest information about developments related to 

Form 5884 and its instructions, such as legislation 

enacted after they were published, go to www.irs.gov/

form5884.

What's New

• The work opportunity credit was extended to cover 

employees not certified as qualified veterans who begin 

work after 2011 and before 2014 and employees certified 

as qualified veterans who begin work after 2012 and 

before 2014.

• Empowerment zone designations were extended to 

cover 2012 and 2013. This extension may allow 

employers to use certain wages paid to summer youth 

employees and designated community residents for 

services performed in 2012 and 2013 to figure the credit. 

See Qualified Wages for details.

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. 

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. 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, or 

• SSI recipient. 

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; and 

• Wages for services of replacement workers during a 

strike or lockout.
Form 5884 (2012) Page 3

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 longterm 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 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 secondyear 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.
Form 5884 (2012) Page 4

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.