OMB No. 1545-0219

Form 5884 Work Opportunity Credit

Department of the Treasury

Internal Revenue Service © Attach to your return. AttachmentSequence No. 77

Name(s) shown on return Identifying number

Current Year Credit

1 Enter the total qualified wages paid or incurred during the tax year for services of employees who are

certified as members of a targeted group and who began work for you after September 30, 1996, and

before October 1, 1997 1

Current year credit. Multiply line 1 by 35% (.35). You must subtract this amount from your deduction

for salaries and wages. (Members of a controlled group, see instructions.)

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 13c, 13d, or 14

Schedule K-1 (Form 1041), line 13

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.)

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.

Recordkeeping 4 hr., 18 min.

Learning about the law

or the form 42 min.

Preparing and sending

the form to the IRS 48 min.

The time needed to complete and file this

form will vary depending on individual

circumstances. The estimated average time

is:

Form 5884 (1996)

Part I

Part II

%

Cat. No. 13570D

Section references are to the Internal

Revenue Code.

Paperwork Reduction Act Notice

● Individuals. Enter amount from Form 1040, line 38

● 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 10) 6a

b Credit for the elderly or the disabled (Schedule R (Form 1040), line 20) 6b

d Foreign tax credit (Form 1116, line 32, or Form 1118, Sch. B, line 12) 6d

e Possessions tax credit (Form 5735) 6e

6f f

g 6g

Credit for fuel from a nonconventional source

h

Qualified electric vehicle credit (Form 8834, line 19)

Add lines 6a through 6g 6h

7 Net regular tax. Subtract line 6h 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 41

10 Tentative minimum tax (see instructions):

● Individuals. Enter amount from Form 6251, line 26

10

● Corporations. Enter amount from Form 4626, line 13

● Estates and trusts. Enter amount from Form 1041,

Schedule I, line 37

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 42; 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

%

%

c Mortgage interest credit (Form 8396, line 11) 6c

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

96

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.
Form 5884 (1996) Page 2

● Qualified food stamp recipient.

See section 51(d) for details and

restrictions.

1. More than half the wages received from

you must be for working in your trade or

business.

2. You may not claim a credit on wages

that were repaid by a federally funded

on-the-job training program, or for which you

received work supplementation payments

under the Social Security Act.

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.

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:

3. The employee cannot be your relative or

dependent. See section 51(i) for other

restrictions.

4. The employee cannot be your rehired

employee if he or she was not a targeted

group member when employed earlier.

Who Must File Form 3800

1. 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.

5. The employee must have worked for you

for at least 180 days or completed at least

400 hours of service (20 days or 120 hours

for a qualified summer youth employee).

2. You used the full absorption method of

inventory costing that required you to reduce

your basis in inventory for the credit.

6. The wages cannot be for services of

replacement workers during a strike or

lockout.

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 complete Form

8850, Work Opportunity Pre-Screening Notice

and Certification Request, by the day the

employer offers the individual a job. 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.

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.

How To Claim the Credit

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.

1. You can take the credit for agricultural

employees who meet the other tests if their

services qualify under FUTA as agricultural

labor during more than half of any pay period.

Base your credit for each employee on the

first $6,000 in wages subject to social

security and Medicare taxes paid or incurred

for that person during the year.

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.

2. You can take the credit for railroad

employees who meet the other tests if their

wages qualify under the Railroad

Unemployment Insurance Act (RUIA). Base

your credit for each employee on the first

$6,000 in wages subject to RUIA tax paid or

incurred for that person during the year.

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.

Specific Instructions

Line 1.—Enter the first-year wages paid or

incurred to qualified employees who began

work for you after September 30, 1996, and

before October 1, 1997. The wages are

limited to $6,000 of first-year wages.

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 3 years,

then forward 15 years. See the separate

Instructions for Form 3800 for details.

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 successor

program.

● Qualified veteran.

● Qualified ex-felon.

● High-risk youth.

● Vocational rehabilitation referral.

● Qualified summer youth employee.

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.—Enter the tentative minimum tax

(TMT) that was figured on the appropriate

alternative minimum tax (AMT) form or

schedule. Although you may not owe AMT,

you must still compute the TMT to figure your

credit.

If for this year you have more than one of the

credits included in the general business credit

listed below, have a carryback or

carryforward of any of the credits, or have a

credit from a passive activity, you must

complete Form 3800, General Business

Credit, instead of completing Part II of Form

5884 to figure the tax liability limitation.

In general, figure your credit based on the

employee’s wages subject to the Federal

Unemployment Tax Act (FUTA), but not more

than $6,000 for each employee. Special rules

apply in the following cases:

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.

The general business credit consists of the

following credits: investment, work

opportunity, alcohol used as fuel, research,

low-income housing, enhanced oil recovery,

disabled access, renewable electricity

production, Indian employment, employer

social security and Medicare taxes paid on

certain employee tips, orphan drug,

contributions to certain community

development corporations, and trans-Alaska

pipeline liability fund. The empowerment zone

employment credit, while a component of the

general business credit, is figured separately

on Form 8844 and is never carried to Form

3800.

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. You can

write to the IRS at the address listed in the

instructions of the tax return with which this

form is filed.

General Instructions

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.

Controlled groups.—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 line 1 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.

Tax Law Changes

The Small Business Job Protection Act of

1996 reinstated the former jobs credit as the

work opportunity credit. The credit covers

individuals who begin work after September

30, 1996, and before October 1, 1997. The

credit rate has been reduced to 35% of

qualified wages. Changes also have been

made to the targeted groups qualifying for the

credit and the certification rules.

In addition, to claim the credit on an

employee’s wages:

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.

Do not 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.

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).