Purpose

To explain the procedure for the annual review of employees with Earned Income Credit (EIC).

Affected Employees

Employees eligible to receive advance Earned Income Credit payments for 2007

Background

Internal Revenue Service regulations require employees eligible for advance payment of Earned Income Credit to file a new Form W-5 Earned Income Credit Advance Payment Certificate each year.

The Federal government provides either a credit or an income tax refund to employees who earn low or modest wages, provided eligibility requirements relating to annual income and family size are met.  Eligible employees have the option of receiving advance payment of the Earned Income Credit directly from their employer in the form of regular EIC payments added to their paychecks.

Control-D Report

Control-D report TAX113, available on November 20, 2006, identifies employees in each agency who currently claim Earned Income Credit.  The employees appearing on this report must have their Federal tax records changed if a new Form W-5 is not filed.

Agency Actions

If the agency does not receive a new Form W-5 for an employee identified on this Control-D report by December 20, 2006 (Institution) or December 27, 2006 (Administration), the EIC must be cancelled on the Employee Tax Data Page and made effective for the first payroll check in 2007.  For Institution agencies, the effective date would be paychecks dated January 4, 2007.  For Administration agencies, the effective date would be paychecks dated January 10, 2007.

Questions

Questions regarding this bulletin may be directed to the Payroll Deductions mailbox.