N-884: Credit for Employment of Vocational Rehabilitation Referrals (2024)

Who files this form

Use Form N-884 if you hire new employees who are vocational rehabilitation referrals and choose to claim the credit for their qualified first-year wages.

The form also reports unused credits carried over from prior years and credits passed through from other entities. Qualifying S corporations and partnerships may pass the credit through to their shareholders or partners.

When it's due

For tax year 2024, all claims for this credit, including amended claims, must be filed on or before the end of the twelfth month following the close of the taxable year for which the credit is claimed.

Missing this deadline waives your right to claim the credit.

What you'll need

Have the following information ready, as applicable:

• Your name as shown on your return and your Social Security number or federal employer identification number.
• Each employee’s name, approved employment starting date, Social Security number, and qualified first-year wages paid during the tax year. Attach a schedule if you need more space.
• Approved employee certification forms. Keep these for audit purposes.
• Schedule K-1 from Form N-20, N-35, or N-40 for credits passed through to you, or a cooperative statement or federal Form 1099-PATR for a cooperative credit. Include the flow-through entity’s name and federal employer identification number.
• Any unused credit carried over from prior years, your adjusted tax liability, and information about other nonrefundable credits you are claiming.
• Schedule CR to report the credit amounts.

How to file

Attach Form N-884 to Form N-11, N-15, N-20, N-30, N-35, N-40, or N-70NP, as applicable.

• List eligible employees and qualified first-year wages, limited to $6,000 per employee. Total those wages on line 2 and multiply by 20% for line 3.
• Add flow-through credits on line 4. Report the total new credit on line 5 and Schedule CR, line 25, column (b).
• Form N-20 and N-35 filers report line 5 on the appropriate Schedule K line and skip lines 6 through 12. Form N-40 filers report beneficiaries’ shares on Schedule K-1 or continue to line 6 for the trust or estate’s share.
• Other filers continue through the remaining lines to account for carryovers and the tax liability limit. Report the credit applied on Schedule CR, line 25, column (c), and any unused carryover in column (d).

The supplied text does not give a mailing address or e-filing directions.

Common mistakes

• Not reducing the wage deduction. Subtract the current-year credit on line 3 from your deduction for salaries and wages, even if part of that credit must be carried forward.
• Exceeding the wage limit. Qualified first-year wages cannot exceed $6,000 per employee.
• Not keeping certifications. Employers must retain approved employee certification forms for audit purposes.
• Completing lines that should be skipped. Form N-20 and N-35 filers must skip lines 6 through 12.
• Missing the claim deadline. Late claims, including amended claims, waive the right to the credit.

Questions people ask

How much is the credit?

The credit is 20% of qualified first-year wages, with no more than $6,000 of wages counted per employee.

Is the credit refundable?

No. It is nonrefundable. Unused credit may be carried forward against income tax liability in subsequent years until exhausted.

Can I use Form N-884 just to report a carryover?

Yes. The form is also used to report unused credits from prior years. Enter the carryover on line 6.

Do I need to keep employee certifications?

Yes. Employers must retain approved certification forms for the employees listed on line 1 for audit purposes.

Official sources

• https://files.hawaii.gov/tax/forms/2024/n884_i.pdf