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Form 5884: Work Opportunity Credit
IRS Form 5884 is used to claim the Work Opportunity Credit for qualified first- and/or second-year wages paid to targeted group employees. Taxpayers can claim or elect not to claim this credit any time within 3 years from the due date of their return.
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IRS Form 5884 - Work Opportunity Credit
IRS Form 5884 is used to claim the Work Opportunity Credit for qualified first- and/or second-year wages paid to targeted group employees. Taxpayers can claim or elect not to claim this credit any time within 3 years from the due date of their return.
Risk Radar
Scan points- 1Do not use wages that were already used to figure a disaster-related employee retention credit.
- 2Using wages already claimed for a disaster-related employee retention credit (Instructions p.1).
- 3Failing to obtain and be issued a certification from the state workforce agency (SWA) for each employee (Instructions p.1).
- 4Claiming the credit when the employee did not meet one of the five qualification criteria listed in section 51(i)(1) (Instructions p.2).
- 5Including wages paid to an employee during a federally funded on-the-job training program as qualified wages (Instructions p.2).
Plain English
This form allows a taxpayer to claim a specific tax credit based on wages paid to certain types of employees, known as 'targeted group' employees. The business does not need to be in an empowerment zone or rural renewal county to qualify for this benefit. Filing Form 5884 helps report these credits directly when necessary.
Submission Date
- Filing date: 2021-04-01 11:33:00
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when claiming the work opportunity credit for qualified first- and/or second-year wages paid to targeted group employees during the tax year.
- Do not use it when your only source for the Work Opportunity Credit is a partnership, S corporation, cooperative, estate, or trust (these entities must file Form 5884).
- Check Form 3800 instead when you are another type of taxpayer and wish to report the credit directly on that form.
Deadline or filing window
The filing window allows claiming or electing not to claim the work opportunity credit any time within 3 years from the due date of your return. There is no specific extension mentioned for this form, but the ability to file on an amended return provides flexibility beyond the original deadline.
Checklist
What you need before filling it out
General Purpose
Claiming work opportunity credit for qualified first- and/or second-year wages · Form 5884 (Instructions p.1)
First-Year Wages (>=120 hrs, <400 hrs)
Amount paid $ imes$ 25% (0.25) · Line 1a (Form p.1)
First-Year Wages (>=400 hrs)
Amount paid $ imes$ 40% (0.40) · Line 1b (Form p.1)
Second-Year Wages
Qualified long-term family assistance recipient wages · Line 1c (Form p.1)
Employee Certification Requirement
Must be issued by state workforce agency (SWA) of business location · Instructions p.1 & p.2
Credit Claim Window
Within 3 years from the due date of the return · Instructions p.1
Before you submit
- 1Verify that all wages used were paid to employees certified as members of a targeted group.
- 2Confirm you have attached certification for every employee listed on Form 5884.
- 3Ensure the correct percentage (25%, 40%) is applied based on hours worked for first-year wages.
- 4If filing under a controlled group, ensure Line 2 reflects your proportionate share of the credit.
- 5Attach a statement detailing how your share of the credit was figured if you are in a controlled group.
- 6Check that the Name(s) shown on return match the entity claiming the credit.
- 7Confirm the form is attached to the appropriate tax return.
How to file this form
- 1Obtain and retain certification from the state workforce agency (SWA) for each employee proving targeted group membership.
- 2Calculate your total qualified first-year wages, second-year wages, and determine the applicable credit percentage for each wage type.
- 3Enter the calculated amounts on Line 1a, 1b, or 1c of Form 5884, multiplying by the corresponding rate.
- 4If part of a controlled group, calculate your proportionate share and enter it on Line 2, attaching supporting documentation.
- 5Attach the completed Form 5884 to your tax return (or use Form 5884-C if applicable for veterans).
- 6Keep a copy of the filed form for your records.
Known limitations
- 1The work opportunity credit can be claimed for employees who began work after 2020 and before 2026, as extended by the Taxpayer Certainty and Disaster Tax Relief Act of 2020.
- 2Wages used to figure the disaster-related employee retention credit cannot also be used to figure a credit on Form 5884.
- 3For cooperatives subject to passive activity rules, any Form 5884 credit from passive activities disallowed for prior years must be included on line 3 and determined using Form 8810.
- 4For estates or trusts subject to passive activity rules, any Form 5884 credit from passive activities disallowed for prior years must be included on line 3 and determined using Form 8582-CR.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
Almost done reviewing the fields?
Fillable formOpen in Editor->The current edition is Revision March 2021. The instructions direct users to IRS.gov/Form5884 for the latest information, which may include developments like legislation enacted after the publication date.
What changed or needs a fresh check
- Edition date — confirm the revision date reads March 2021.
- OMB Number — confirm it is 1545-0219.
- Attachment Sequence No. — confirm it is 884.
- Signature — check for signature lines on the form (not explicitly listed, but implied by filing requirement).
- Tax Year Wages — ensure you have calculated the total qualified first- or second-year wages paid or incurred.
Quick Facts
Downloads
After you file
- 1Keep books or records relating to Form 5884 as long as their contents may become material in the administration of any Internal Revenue law.
- 2If you complete Form 8850, submit it to the SWA of the state where the business is located by the 28th calendar day after the individual begins work.
- 3If the credit expires and is retroactively extended, or a targeted group is added or modified, the IRS may allow more time for submitting Form 8850.
- 4For estates/trusts, allocate the credit on line 4 between the entity and beneficiaries in proportion to income allocation, entering the beneficiary's share on line 5.
Sources
- SRCInstructions p.1 — Purpose of Form: Use Form 5884 to claim the work opportunity credit for qualified first- and/or second-year wages paid to or incurred for targeted group employees.
- SRCInstructions p.1 — Filing Window: 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.
- SRCInstructions p.1 — Required Filers: Partnerships, S corporations, cooperatives, estates, and trusts must file Form 5884 to claim the credit.
- SRCInstructions p.1 — Pre-requisite Action: 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.
- SRCInstructions p.2 — Qualified Wages Definition: Wages qualifying for the credit have the same meaning as wages subject to the Federal Unemployment Tax Act (FUTA) (determined without regard to the $7,000 FUTA tax wage base).
- SRCInstructions p.3 — Credit Allocation Method: 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.
Common confusion points
Who must file Form 5884?
Partnerships, S corporations, cooperatives, estates, and trusts must file this form.
→ Check if your entity type requires filing.
How long do you have to claim the 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 or amended return.
→ Verify the current tax year's due date.
What are 'qualified wages'?
Wages subject to the Federal Unemployment Tax Act (FUTA), determined without regard to the $7,000 FUTA tax wage base.
→ Ensure the wages meet the definition of FUTA-subject wages.
When does a qualified wage count as zero?
If the employee didn't work for you for at least 120 hours, worked for you previously, is your dependent, is related to you, or if 50% or less of their wages were for working in your trade or business.
→ Review these five specific conditions.
What are 'targeted group employees'?
Employees who qualify under specified groups such as vocational rehabilitation referral, summer youth employee, SNAP recipient, SSI recipient, or qualified long-term unemployment recipient.
→ Refer to the Instructions for Form 8850 and section 51(d) for full details.
Does my business need to be in a special area?
No, your business does not have to be located in an empowerment zone or rural renewal county to qualify for this credit.
→ Confirm location requirements are not necessary.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- Instructions for Form 8850/IRS.gov/Form8850 — Provides details if more time is allowed to submit Form 8850.
Questions about IRS Form 5884
What is IRS Form 5884 used for?
This form allows a taxpayer to claim a specific tax credit based on wages paid to certain types of employees, known as 'targeted group' employees. The business does not need to be in an empowerment zone or rural renewal county to qualify for this benefit. Filing Form 5884 helps report these credits directly when necessary.
Who must file IRS Form 5884?
Partnerships, S corporations, cooperatives, estates, and trusts must file IRS Form 5884 to claim the work opportunity credit. All other taxpayers are not required to complete or file it if their only source for the credit is one of those specified entities.
What information does IRS Form 5884 require?
The form collects details regarding the credit amount on lines 1 through 6, which includes reporting the total credit (line 4) and any amounts allocated to patrons or beneficiaries (line 5). For controlled groups, line 2 requires entering the proportionate share of qualified wages giving rise to the group’s work opportunity credit.
When is IRS Form 5884 due?
A taxpayer can claim or elect not to claim the work opportunity credit anytime within 3 years from the due date of their return on either the original return or an amended return.
Where do I file IRS Form 5884?
The routing instructions are determined by the filer type: Partnerships and S corporations stop after line 4 and report there; All others stopping at line 4 report this amount on Form 3800, Part III, line 4b.
How do I complete IRS Form 5884?
The filer completes the form by calculating the total credit, which is shown on line 4; if a cooperative or trust, they must calculate their tax liability first before determining the excess allocated to patrons on line 5. For controlled groups, the proportionate share goes on line 2 with an attached statement showing how it was figured. The final step involves reporting the relevant amount on Form 3800, Part III, line 4b.
What happens if IRS Form 5884 is filed incorrectly?
Failing to correctly file IRS Form 5884 means the taxpayer may not receive the benefit of claiming the work opportunity credit for those wages. The Paperwork Reduction Act Notice states that failure to provide the requested information prevents the agency from figuring and collecting the right amount of tax.
Who must file Form 5884?
Partnerships, S corporations, cooperatives, estates, and trusts must file this form. Check if your entity type requires filing.
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