An employee who is eligible for the earned income credit (EIC) and
who has a qualifying child is entitled to receive EIC payments with
his or her pay during the year. To get these payments, the employee
must give you a properly completed Form W-5,
Earned Income Credit Advance Payment Certificate. You
are required to make advance EIC payments to employees who give you a
properly completed Form W-5, except that you are not required to
make these payments to farm workers paid on a daily basis.
The payment is added to the employee's pay each payday. It is
figured from tables in Circular A. You reduce your liability for
income tax withholding, social security tax, and Medicare tax by the
total advance EIC payments made. For more information, see Circular A.
Notification.
You must provide notification about the EIC to each employee who
worked for you at any time during the year and from whom you did not
withhold any income tax. However, you do not have to notify employees
who claim exemption from withholding on Form W-4.
You meet the notification requirement by giving each employee any
one of the following.
- Form W-2, which contains the notification on the back
of Copy B.
- A substitute Form W-2 with the exact EIC wording shown
on the back of copy B of Form W-2.
- Notice 797, Possible Federal Tax Refund Due to the
Earned Income Credit (EIC).
- Your own written statement with the exact wording of Notice
797.
For more information about notification requirements and claiming
the EIC, see Notice 1015, Have You Told Your Employees About the
Earned Income Credit (EIC)?
Previous | First | Next
Publication Index | 2000 Tax Help Archives | Tax Help Archives | Home
