The Earned Income Tax Credit (EITC) is a refundable credit for certain workers who earn low to moderate incomes. Employers are required to provide a notice to all or some of their employees to notify the employees that they may be eligible for the EITC. Currently there are notification requirements under federal regulations and several states have adopted their own employee notification rules.
Employer’s must notify each individual who was employed during the calendar year and who did not have income tax withheld. This is not a requirement if the employee claimed withholding exemption on the Form W-4.
Employers may notify employees in the following manners:
- On Form W-2
- On Form W-2 Substitute
- IRS Notice 797
- Written statement using Notice 797 language
In addition to the Federal EITC notification requirements, in certain jurisdictions there are additional requirements that employers must meet; a reference table is provided below.
Employers and employees may access the federal and state EITC information through the Paylocity Self-Service portal by clicking on “More information about your W2” on the W2 Online Preview page. This information is also available in our Year End Guide.