Fill - Free fillable F8861 Accessible Form 8861 (Rev. 12-2006) PDF form

Qualified first-year wages $ a

Form 8861

(Rev. December 2006)

Welfare-to-Work Credit

OMB No. 1545-1569

Cat. No. 24858E

Department of the Treasury

Internal Revenue Service

For Paperwork Reduction Act Notice, see instructions.

Attachment

Sequence No.

107

Attach to your tax return.

䊳

Name(s) shown on return Identifying number

1 Enter on the applicable line below the qualified first- or second-year wages paid or incurred

during the tax year and multiply by the percentage shown for services of employees who began

work for you before the date in the instructions, and are certified as long-term family assistance

recipients.

a Qualified first-year wages $

� 35% (.35)

Qualified second-year wages $ � 50% (.50)

Add lines 1a and 1b. See instructions for the adjustment you must make for salaries and wages

3 Welfare-to-work credit from partnerships, S corporations, cooperatives, estates, and trusts

4 Add lines 2 and 3. Cooperatives, estates, and trusts, go to line 5; partnerships and S corporations,

report this amount on Schedule K; all others, report this amount on the applicable line of Form

3800 (e.g., line 1c of the 2006 Form 3800)

Amount allocated to the patrons of the cooperative or the beneficiaries of the estate or trust (see

instructions)

Cooperatives, estates, and trusts, subtract line 5 from line 4. Report the amount on the applicable

line of Form 3800 (e.g., line 1c of the 2006 Form 3800)

General Instructions

Section references are to the Internal Revenue Code unless

otherwise noted.

What’s New

CAUTION

The Tax Relief and Health Care Act of 2006

extended the welfare-to-work credit to cover

employees who begin work for the employer

before January 1, 2008. However, after December

31, 2006, the welfare-to-work credit will be unified with the

work opportunity credit. Because of these changes, this form

should not be used to calculate a credit for any employee

hired after December 31, 2006. For 2007 and later, section 51

has been amended, and section 51A has been repealed. To

calculate a credit for any employee hired after December 31,

2006, use Form 5884, Work Opportunity Credit. For more

information on these changes, see Publication 553, Highlights

of 2006 Tax Changes.

The tax liability limit is no longer figured on this form;

instead, it must be figured on Form 3800, General Business

Credit.

Taxpayers that are not partnerships, S corporations,

cooperatives, estates, or trusts, and 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 line 1c of Form 3800.

The IRS will revise this December 2006 version of the form

only when necessary. Continue to use this version for tax

years beginning after 2005 until a new revision is issued.

Purpose of Form

Use Form 8861 to claim the welfare-to-work credit for wages

you paid to or incurred for long-term family assistance

recipients during the tax year. The credit is 35% of qualified

first-year wages and 50% of qualified second-year wages

paid or incurred during the tax year.

You can claim or elect not to claim the welfare-to-work

credit any time within 3 years from the due date of your

return on either your original return or on an amended return.

How To Claim the Credit

To claim the welfare-to-work 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 long-term family assistance recipient.

You must receive the certification by the day the individual

begins work, or you must 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.

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.

Long-term family assistance recipient. An employee may

be certified as a long-term family assistance recipient if the

employee is a member of a family that:

Received assistance payments from Temporary Assistance

for Needy Families (TANF) for at least 18 consecutive months

ending on the hiring date,

Received assistance payments from TANF for any 18 months

(whether or not consecutive) beginning after August 5, 1997,

and the employee is hired not more than 2 years after the end

of the earliest 18-month period, or

After August 5, 1997, stopped being eligible for assistance

payments from TANF because federal or state law limits the

maximum period such assistance is payable, and the

employee is hired not more than 2 years after the date the

eligibility for such assistance ended.

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

●

Form 8861 (Rev. 12-2006)

Form 8861 (Rev. 12-2006) Page 2

group’s welfare-to-work credit. Enter your share of the credit

on line 2. Attach a statement showing how your share of the

credit was figured, and write “See attached” next to the entry

space for line 2.

Additional Information

For more details, see Pub. 954, Tax Incentives for Distressed

Communities, and section 51A.

Specific Instructions

Lines 1a and 1b

Enter on the applicable line and multiply by the percentage

shown the total qualified first-year or second-year wages

paid or incurred to employees certified as long-term family

assistance recipients. Qualified first-year wages are qualified

wages you paid or incurred for work performed during the

1-year period beginning on the date the certified individual

begins work for you. Qualified second-year wages are

qualified wages you paid or incurred for work performed

during the 1-year period beginning on the day after the last

day of the first-year wage period. The amount of qualified

first-year wages, and the amount of qualified second-year

wages, which may be taken into account for any employee is

limited to $10,000 per year.

Qualified Wages

Wages qualifying for the credit generally have the same

meaning as wages subject to the Federal Unemployment Tax

Act (FUTA). For agricultural employees, 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.

Qualified wages also include the following amounts you

paid or incurred for the employee that are excludable from

the employee’s gross income.

Premiums and other amounts you paid or incurred under

an accident and health plan excluded under section 105 or

106 (the amount must be based on the reasonable cost of

coverage, but may not exceed the “applicable premium”

under section 4980B(f)(4)).

Educational assistance excluded under section 127, if paid

or incurred to a person not related to the employer.

Dependent care benefits excluded under section 129.

The amount of qualified wages for any employee is zero if:

The employee did not work for you for at least 400 hours

or 180 days,

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 any employee during any period for which

you received payment for the employee from a federally

funded on-the-job training program, and

Wages for services of replacement workers during a strike

or lockout at a plant or facility.

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.

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.

Estates and trusts. Allocate the welfare-to-work 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.

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 2 hr., 37 min.

Learning about the law

or the form 1 hr., 17 min.

Preparing and sending

the form to the IRS 1 hr., 23 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.

Download
Save PDF to desktop

Email
Email completed PDF

Send for Signing
Email for others to sign

Print
Print document

NAME

F8861 Accessible Form 8861 (Rev. 12-2006)

View Audit Log
Print With Audit Log
Duplicate Document

Fill Online, Printable, Fillable, Blank F8861 Accessible Form 8861 (Rev. 12-2006) Form

Use our library of forms to quickly fill and sign your IRS forms online.

Related forms

Fillable F8861 Accessible Form 8861 (Rev. 12-2006)

Fill Online, Printable, Fillable, Blank F8861 Accessible Form 8861 (Rev. 12-2006) Form

Use our library of forms to quickly fill and sign your IRS forms online.

Related forms

First 20 documents completely FREE!