Form 5884-C (Rev. 3-2016)
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-C and its instructions, such as legislation enacted after
they were published, go to www.irs.gov/form5884c.
What's New
The work opportunity credit is now available for qualified first-year
wages paid to qualified veterans who began work for the
organization after December 31, 2014, and before January 1, 2020.
Purpose of Form
Qualified tax-exempt organizations (defined below) use Form
5884-C to claim the work opportunity credit for qualified
first-year wages paid to qualified veterans who begin working
for the organization on or after November 22, 2011, and before
January 1, 2020. The credit is claimed against the employer
portion of social security tax on wages paid to all employees
during the 1-year period beginning on the day a qualified
veteran begins working for the organization. The credit does not
apply to the employer portion of Medicare tax. The qualified
veteran must be performing services in activities related to the
purpose or function constituting the basis of the organization's
exemption under section 501.
The organization files Form 5884-C after it files its
employment tax return for the employment tax period for which
it is claiming the credit. The organization files Form 5884-C for
each employment tax period during which qualified first-year
wages are paid to a qualified veteran. Each Form 5884-C figures
the cumulative credit the organization is entitled to for all
periods during which qualified first-year wages are paid to a
qualified veteran and reduces the amount claimed for the period
by any amounts claimed on previously filed Forms 5884-C.
Generally, the organization should only file one Form 5884-C per
employment tax period.
Form 5884-C is filed separately from any other returns. The
credit claimed on Form 5884-C will not affect the tax liability
reported on the organization's employment tax returns.
Accordingly, the organization should not reduce its required
deposits in anticipation of any credit. Instead, the IRS will refund
the amount shown on line 11 of Form 5884-C, plus any interest
that applies, unless the IRS corrects Form 5884-C during
processing or the organization owes other taxes, penalties, or
interest.
TIP
The amount properly claimed on Form 5884-C is
treated as a credit on the first day of the organization’s
employment tax return period. However, because
Form 5884-C will generally not be processed with the
organization’s employment tax return, an organization that
reduces its required deposits in anticipation of a Form 5884-C
credit may receive a system-generated notice reflecting a
balance due and associated penalties and interest, if applicable.
The balance due, including any related penalties and interest,
resulting from the reduction in deposits to reflect the Form
5884-C credit will be abated when the credit is applied. Such
abatement will generally occur without any action from the
organization.
Qualified Tax-Exempt Organization
A qualified tax-exempt organization is an organization described
in section 501(c) and exempt from tax under section 501(a). An
agency or instrumentality of the federal government, or of a
state, local, or Indian tribal government, is not a qualified tax-
exempt organization unless it is an organization described in
section 501(c) and exempt from tax under section 501(a).
Qualified Veteran
A qualified veteran is a veteran certified (as described below) as
any of the following.
• 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.
• 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.
• 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.
• Entitled to compensation for a service-connected disability
and hired not more than 1 year after being discharged or
released from active duty in the U.S. Armed Forces.
• 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.
To be considered a veteran, the individual must:
• Have served on active duty (not including training) in the U.S.
Armed Forces for more than 180 days or have been discharged
or released from active duty for a service-connected disability,
and
• Not have a period of active duty (not including training) of
more than 90 days that ended during the 60-day period ending
on the hiring date.
Certification Requirement
The organization must be issued a certification for each qualified
veteran from the state employment security agency (SESA). The
certification proves that the employee is a qualified veteran.
For qualified veterans who will begin working for the
organization after May 31, 2016, the organization must either:
• 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 it
offers the individual a job and receive the certification before it
claims the credit.
If the organization completes Form 8850, it generally must be
signed by an officer of the organization and the individual and
submitted to the SESA of the state in which the organization is
located (where the employee works) by the 28th calendar day
after the date the individual begins work.
For individuals who began working for the organization on or
after January 1, 2015, and on or before May 31, 2016, Form
8850 can be completed and signed as described above at any
time as long as it is completed, signed, and submitted to the
SESA by June 29, 2016.
If the SESA denies the request, it will provide a written
explanation of the reason for denial. If the certification is
revoked because it was based on false information provided by
the worker, wages paid or incurred after the date the
organization receives the notice of revocation do not qualify for
the credit.
Qualified First-Year Wages
Qualified first-year wages are generally wages subject to social
security tax paid to a qualified veteran during the 1-year period
beginning on the day the qualified veteran begins working for
the organization. However, qualified first-year wages for any
employee must be reduced by the amount of any work
supplementation payments the organization received under the
Social Security Act for the employee.