IRS Form 8850

From AIM Financial — Business Tax Preparation in Grand Rapids, Kentwood, Wyoming, and West Michigan

Employers have historically been able to claim federal tax credits for hiring certain workers who face barriers to employment. The Work Opportunity Tax Credit (WOTC) provided an incentive to hire qualifying veterans, certain unemployed individuals, and people participating in specified government assistance programs.

However, employers need to understand an important current development: the federal authorization for WOTC expired on December 31, 2025, and the IRS states that Form 8850 is no longer in use. Employers may still need to address documentation and tax reporting for qualifying hires who began work before the expiration date. <Cite refs={[“turn977074search0″,”turn977074search4″,”turn977074search13”]}/>

AIM Financial helps businesses understand federal tax requirements, review tax documents, and prepare accurate business tax returns.

What Was IRS Form 8850?

IRS Form 8850 was titled Pre-Screening Notice and Certification Request for the Work Opportunity Credit.

Before the program’s authorization expired, employers used the form to screen job applicants and request certification from their state workforce agency. The certification process determined whether an applicant belonged to a qualifying group under the WOTC rules.

Form 8850 was not itself the form used to calculate the final tax credit. Instead, it was part of the required process for establishing eligibility.

Employers generally needed to complete the screening process by the date a job offer was made and submit the required certification request within 28 days after the employee began work. Other forms, including Department of Labor forms, could also be required.

For the latest federal status, see the IRS Form 8850 page.

Which Employees Qualified Under the Former Program?

Before its expiration, WOTC covered certain employees from designated groups who met the program’s requirements. These included categories such as:

• Qualified veterans, including certain unemployed or disabled veterans.
• Certain individuals who received Supplemental Nutrition Assistance Program benefits.
• Certain recipients of Temporary Assistance for Needy Families.
• Certain individuals receiving Supplemental Security Income.
• Qualified individuals referred through vocational rehabilitation programs.
• Certain formerly incarcerated individuals.
• Certain individuals who had experienced long-term unemployment.
• Other qualifying groups specified under the law, including certain residents of designated areas.

An employee did not qualify simply because they belonged to one of these broad categories. The employee had to meet the applicable statutory criteria, and the employer generally needed certification from the appropriate state agency.

Employers also had to follow the program’s screening and application deadlines.

How Did the Work Opportunity Tax Credit Work?

Under the former program, eligible taxable employers could generally claim a credit based on a percentage of qualified first-year wages paid to a certified employee, subject to wage limits and other requirements.

For many qualifying employees who worked at least 400 hours during their first year, the general credit was 40% of up to $6,000 in qualified first-year wages. This could produce a credit of up to $2,400 for many qualifying hires. Some targeted categories, particularly certain veterans, had different wage limits and potentially larger credits.

Employees who worked at least 120 hours but fewer than 400 hours could qualify for a lower percentage under the former rules.

These figures describe the historical WOTC program. They should not be treated as a currently available credit for workers who began employment in 2026 unless Congress reauthorizes the program or new legislation provides otherwise.

The credit was generally claimed as a general business credit by taxable employers. Certain qualified tax-exempt organizations could claim a separate credit for hiring qualified veterans under the applicable rules.

What Does the Expiration Mean for Employers in 2026?

Because WOTC authorization expired at the end of 2025, employers should distinguish between earlier qualifying hires and employees who began work in 2026.

Employees who began work on or before December 31, 2025: Employers may still need to complete outstanding certification requests, maintain records, or determine whether a credit can be claimed for qualifying wages under the applicable rules. The timing of the original application remains important.

Employees who began work on or after January 1, 2026: As of October 2026, the IRS states that the credit does not apply to employees who begin work after December 31, 2025. State agencies may retain applications submitted during the authorization lapse, but employers should not assume those applications establish eligibility for a current credit.

Credits from prior qualifying periods: Businesses should review previously earned credits, unused carryforwards, and any outstanding tax filings with a qualified tax professional. The expiration does not automatically erase every tax consequence associated with earlier eligible hires.

Employers should check the IRS Work Opportunity Tax Credit guidance for updates before taking action.

What Records Should Employers Keep?

Even though Form 8850 is no longer in use for new qualifying hires under the expired program, employers may need to preserve records connected with earlier applications and credits.

Useful records include:

• Copies of completed Form 8850 and any required Department of Labor forms.
• The employee’s hire date and job-offer date.
• The date the screening information was obtained.
• State workforce agency certification or correspondence.
• Payroll records showing qualified wages and hours worked.
• Copies of filed business tax returns and credit calculations.

The former program generally required employers to submit certification requests within 28 days after the employee began work. Employers should not assume that a late application can be corrected simply by submitting the form now.

If your business has an outstanding application or an unclaimed credit from an earlier year, review the matter promptly with a tax professional and the relevant state agency.

What Should Employers Do Instead?

With WOTC no longer authorized for employees who begin work after December 31, 2025, employers should focus on maintaining compliant hiring and payroll practices while monitoring any legislative changes.

Consider these steps:

1. Review outstanding WOTC applications for employees hired during an eligible period.
2. Confirm whether the state workforce agency has issued the required certification.
3. Keep records supporting any historical credit claimed.
4. Review unused credit carryforwards and applicable tax return requirements.
5. Monitor official IRS announcements for any reauthorization or new guidance.

Employers should not promise applicants that hiring them will generate a WOTC credit unless current law supports that claim.

Get Business Tax Preparation Help From AIM Financial

Tax credits can be valuable, but eligibility rules, application deadlines, and legislative changes make it important to review the facts before claiming a benefit.

AIM Financial helps businesses in Grand Rapids, Kentwood, Wyoming, and throughout West Michigan with business tax preparation and federal tax reporting. We can help you organize your business records, review previous tax credit documentation, and prepare accurate tax returns.

If your business hired employees under the former Work Opportunity Tax Credit program or has questions about an outstanding certification, contact AIM Financial to discuss your tax preparation needs.

This article is for general educational purposes only. WOTC authorization expired on December 31, 2025. Eligibility for historical credits and the treatment of outstanding applications depend on the applicable law and facts. Verify the latest official guidance before filing.