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Publication 225

Advance Payment of Earned Income Credit (EIC)(p79)

The option of receiving advance payroll payments of EIC expired on December 31, 2010. Individuals eligible for EIC in 2011 can still claim the credit when they file their federal income tax return. Individuals who received advance payments of EIC in 2010 must file a 2010 federal income tax return.
An employee who is eligible for 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. You are usually required to make advance EIC payments to employees who give you a properly completed Form W-5, but you do not have to make these payments to farmworkers paid on a daily basis.
EIC payment is added to the employee's pay each payday. It is figured from tables in Publication 51 (Circular A). You reduce your liability for federal income tax withholding, social security tax, and Medicare tax by the total advance EIC payments made. For more information, see Publication 51 (Circular A).


You must provide notification about EIC to each employee who worked for you at any time during the year and from whom you did not withhold any federal income tax. However, you do not have to notify employees who claim exemption from federal income tax withholding on Form W-4.
You meet the notification requirement by giving each employee any of the following.
For more information about notification requirements and claiming EIC, see Notice 1015, Have You Told Your Employees About the Earned Income Credit (EIC)?