The advance EITC allows certain taxpayers to receive their EITC in installments
throughout the year, instead of a lump sum during the following filing season. Those
who expect to qualify for advance EITC can register in January. The credit will
appear in each paycheck, equally dispersed throughout the year.
Taxpayers who expect to qualify for advance EITC must expect:
Taxpayers who want to receive advance EITC payments must complete Form W-5, Earned
Income Credit Advance Payment Certificate, give the bottom part to their employer
and keep the top part for their records. With this authorization, employers will
include the designated amount in the taxpayer's paychecks.
When participating taxpayers no longer expect to qualify for the EITC, they must
fill out a new Form W-5 and give it to their employer to stop the advance payments.
Taxpayers whose only income is from self-employment are not eligible to receive
advance EITC payments.
Q1. What is the advance Earned Income
Tax Credit (Advance EITC)?
A1. The advance EITC allows those taxpayers who expect to qualify for the Earned
Income Tax Credit (EITC) and have at least one qualifying child to receive part
of the credit in each paycheck during the year the taxpayer qualifies for the credit.
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Q2. Why should I be interested in the advance EITC?
A2. If you are working and
- you expect your 2005 income will be below approximately $31,000 ($33,000 if married
filing jointly)
- you expect to have at least one qualifying child, and
- you expect to qualify for the EITC, you can choose to get part of the credit with
your paycheck.
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Q3. How do I get Advance EITC payments?
A3. See if you qualify for Advance EITC payments by completing the five questions
on the back of Form W-5, Earned Income Credit Advance Payment Certificate, available
here or through your employer.
If you qualify, complete the bottom part of the Form W-5 and give it to your employer.
Then, based on your income, your employer adds additional money to your take-home
pay in each paycheck.
If your only income is from self-employment, you cannot qualify for advance EITC
payments.
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Q4. Could my advance EITC payments change?
A4. Yes, if during the year, your income rises above the dollar limit, or you no
longer qualify for the EITC, you need to fill out a new Form W-5 and give it to
your employer to stop the advance payments.
If you no longer qualify for the Advance EITC, you will have to repay all advance
EITC money when you file your tax return.
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Q5. If I get the advance EITC do I have to file a tax return?
A5. Yes. If you receive the Advance EITC, you must file a tax return. The Form W-2
provided by your employer will show the amount of the advance EITC you received.
This amount must be reported on your tax return. You will also be able to claim
any additional credit to which you may be entitled.
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Q6. Where can I get more information and help with the EITC and advance EITC?
A6. If you want to claim the EITC or Advanced EITC you should make sure your are
eligible for the credit before sending in your tax return. Don't guess. Know, if
you are qualified.
Paid Tax Professional
Q7. Where can my employer get information about AEITC?
A7. Employers can refer to
Publication 15, Circular E, Employer's Tax Guide, and review our web page
"Would you like to help your employees increase their take–home pay at no cost to
you?"
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EITC Assistant
Will you qualify for the EITC this year? Tired of guessing? Don't guess. Know. There's
a lot to know about qualifying for EITC, but the most important thing to know is
you can get help figuring it all out. The
EITC Assistant is a convenient way for you to find out if you are likely
to qualify for the EITC tax credit by answering questions online, about yourself,
your children, your living situation, and your income. You will see the results
of the eligibility check right away, on your computer screen. The Assistant can
be used by individuals, tax practitioners, employers, community and public service
organizations, and IRS partners. EITC is a refundable credit that helps
families. The EITC Assistant is:
Easy to follow
Simple to navigate
If in doubt, check it out using the
EITC Assistant!
Go to the IRS EITC Main Page