What Is Form 8850?

Form 8850 is an IRS form used by employers as part of the process for claiming the Work Opportunity Tax Credit (WOTC). The WOTC is a federal tax credit available to employers who hire individuals from certain target groups that have consistently faced significant barriers to employment. These target groups include, but are not limited to, veterans, individuals receiving government assistance, ex-felons, and certain long-term unemployed individuals.

Form 8850 itself does not grant the tax credit. Instead, it is the employer’s formal request for certification that a new hire qualifies as a member of one of the eligible target groups. Once submitted, the form is reviewed by the state workforce agency (SWA), which determines whether the employee meets the criteria for the WOTC.

Purpose and Use

Employers use Form 8850 to initiate the certification process by pre-screening a job applicant before or on the date of a job offer. The form contains questions intended to identify whether the applicant falls into one of the qualifying groups. It must be completed and signed by both the applicant and the employer. The employee fills out the first part of the form, disclosing personal background information that may make them eligible. The employer completes the second part, indicating the offer of employment and contact information.

Timeliness is crucial. Form 8850 must be submitted to the appropriate SWA no later than 28 calendar days after the eligible worker begins employment. Late submissions typically disqualify the employer from receiving the credit, even if the employee would otherwise qualify.

How It Fits into the WOTC Process

Form 8850 is only one step in the larger process of claiming the Work Opportunity Tax Credit. After submitting the form, employers may also need to complete additional documentation, such as ETA Form 9061 (Individual Characteristics Form), which provides further detail about the employee’s background. These forms together allow the SWA to determine eligibility for the credit.

If the SWA certifies that the individual qualifies, the employer can then claim the credit using IRS Form 5884 (Work Opportunity Credit) on their federal income tax return. The amount of the credit depends on the target group, wages paid, and number of hours worked during the employee’s first year.

Who Qualifies Under Form 8850

The form is used to screen for members of specific target groups, which include:

• Qualified IV-A recipients (Temporary Assistance for Needy Families or TANF)
• Qualified veterans (including those with service-connected disabilities or long periods of unemployment)
• Ex-felons hired within one year of release or conviction
• Designated community residents (those living in certain economically distressed areas)
• Vocational rehabilitation referrals
• Supplemental Nutrition Assistance Program (SNAP) recipients
• Supplemental Security Income (SSI) recipients
• Long-term unemployed individuals
• Long-term family assistance recipients

Each of these groups has its own definition and criteria, so the employee’s eligibility often requires supporting documentation or verification.

Filing Deadlines and Requirements

Employers must adhere to strict filing deadlines. The 28-day rule is not flexible, and failing to meet it generally means losing out on the tax credit. Employers must ensure that the information provided on the form is accurate and complete. Falsifying information on Form 8850 can lead to penalties and loss of eligibility.

The form must be sent to the state workforce agency in the state where the employee will work. Some states allow electronic submission, while others require paper filing. Employers should consult their state’s specific requirements to avoid delays or errors.

Privacy and Compliance

Because Form 8850 collects sensitive personal information, including details about an applicant’s receipt of public assistance or criminal history, employers must handle it with care. The completed form should be stored securely and only shared with parties directly involved in the WOTC certification process. Employers must also comply with federal and state privacy laws and anti-discrimination regulations during the hiring and tax credit process.

The Bottom Line

Form 8850 is an essential part of the process for employers seeking to claim the Work Opportunity Tax Credit. It serves as the formal pre-screening notice that identifies potentially eligible new hires and initiates the state certification process. Employers who understand the timing, documentation requirements, and compliance rules surrounding Form 8850 are better positioned to take advantage of the WOTC while remaining within regulatory guidelines. Proper use of this form can result in meaningful tax savings and support efforts to provide employment opportunities to individuals facing barriers to work.