I heard there is a credit for hiring certain groups of workers,
such as veterans or ex-felons. Is that the same thing as the Work Opportunity
The Work Opportunity Credit provides an incentive to hire individuals from
targeted groups that have a particularly high unemployment rate or other special
employment needs. The credit can be as much as 40% of the "qualified first
year wages" you pay to individuals who begin work for you before January 1,
2006. The credit can be claimed by filing Form 5884 (PDF), Work
An individual is a member of a targeted group if he or she is a:
- Qualified recipient of assistance under temporary assistance for needy
- Qualified veteran.
- Qualified ex-felon.
- High-risk youth.
- Vocational rehabilitation referral.
- Qualified summer youth employee.
- Qualified food stamp recipient.
- Qualified SSI recipient.
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:
1) 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
2) On or before the day you offer employment to an individual, you complete Form 8850 (PDF), Pre-Screening Notice and Certification
Request for the Work Opportunity and Welfare-to-Work Credits, and send
it to your state employment security agency no later than the 21st day after
the individual begins work.
You must receive the certification before claiming the credit.
Refer to Tax Topic 750, Employer Tax Information, and Tax Info for Business,
on this site for other employer information.
You can search for information in the entire Tax Prep Help section, or in the entire site. For a more focused search, put your search word(s) in quotes.