Rev. date: 1/1/2011The Work Opportunity Credit provides an incentive to hire individuals
from targeted groups that have a particularly high unemployment rate or other
special employment needs. In most cases, the credit can be as much as 40% of the
"qualified first year wages."
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If the individual is a disabled veteran, the credit can be
twice as much.
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If the individual is a long-term family assistance recipient,
the credit is available over a 2-year period and is calculated on a greater
amount of wages.
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The credit is claimed by filing
Form 5884 (PDF),
Work Opportunity Credit, with the business's tax return.
An individual is a member of a targeted group if he or she is
a:
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Qualified recipient of assistance under under title IV of
the Social Security Act
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Qualified veteran
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Qualified ex-felon
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Designated community resident
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Vocational rehabilitation referral
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Qualified summer youth employee
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Qualified recipient of supplemental nutrition assistance
program benefits
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Qualified SSI recipient
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Long-term family assistance recipient
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Unemployed veteran
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Disconnected youth
An individual is not considered a member of a targeted group
unless your state employment security agency certifies him or her as a member.
This certification requirement can be satisfied in either of two ways:
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On or before the day on which the individual begins work for
you, you have received a certification from your state employment security
agency that the individual is a member of a targeted group, or
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On or before the day you offer employment to an individual,
the individual completes page 1 of
Form 8850 (PDF),
Pre-Screening Notice and Certification Request for the Work
Opportunity Credits. -
You complete page 2 of the form, and you send the form to
your state workforce agency no later than the 28th day after the individual
begins work.
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You must receive the certification before claiming the credit.
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