An introduction for business owners claiming the WOTC

If you’re a business owner hoping to benefit from the Work Opportunity Tax Credit (WOTC) program, chances are you’ve encountered IRS Form 5884. In this blog, we’ll answer some common questions about Form 5884. 

WOTC is designed to help disadvantaged job seekers find and keep work, and to reward businesses who hire them with tax credits. Businesses must file Form 5884 with the IRS to claim the WOTC. 

Explore more commonly asked questions about Form 5884 below.

Do I need to file Form 5884?

Form 5884 needs to be filed along with a business’s annual tax return in order to claim the WOTC for that tax year. Form 5884 documents the amount of wages paid to certified WOTC employees during the tax year for which it is filed. These wages must be documented and filed with the IRS in order to substantiate any WOTC credits claimed against a business’s annual taxes.

If you claim any WOTC credits on your annual tax return, you must file Form 5884 along with your tax return in order to substantiate your credits.

What do I need to file Form 5884? 

Because Form 5884 reports the wages paid to WOTC-certified employees worked during a given tax year, you must have the following information in order to complete and file it:

  • WOTC-certified employees
  • Payroll records
  • Information about your business’s federal tax classification, election, etc. 

What is a WOTC-certified employee?

WOTC employees are certified by the appropriate state workforce agency in the employer’s region. Businesses receive certification by filing Form 8850 with the state workforce agency within 28 days for each employee for whom wages are reported on Form 5884. 

When should I file Form 5884?

Form 5884 is filed with your annual business tax return. However, whereas your annual tax return reports earnings from the previous calendar year, it is possible to utilize carryforwards and carrybacks on employment tax credits like the WOTC to maximize your benefits. 

So, you must file Form 5884 along with your annual business tax return by the IRS deadline of April 15 (unless granted an extension by the IRS) in order to claim the WOTC. However, you may complete Form 5884 strategically in order to maximize your WOTC credit year-by-year.

Can I amend Form 5884?

Businesses can amend Form 5884 after submitting it to the IRS. It should be noted, however, that amending Form 5884 affects the filer’s eligibility for any WOTC credits claimed. For that reason, amending Form 5884 also generally involves amending an annual tax return, which may be an expensive and/or time-consuming task. 

So, although you can amend Form 5884, you should conduct a careful cost/benefit analysis before doing so to decide whether it is worth your time and money.

How Arvo helps

Want to claim the WOTC but unsure how? Arvo Tech has helped businesses navigate this lucrative but complicated tax credit program for over ten years. Our team of tax experts knows everything there is to know about completing, filing, and optimizing reporting on Form 5884–and our dedicated state workforce agency team can handle certification of our WOTC employees from start to finish! 

Contact us today to get answers or expert support for WOTC.