6. Advance Earned Income Credit (EIC) Payment An employee who is eligible for the earned income credit (EIC) andwho has a qualifying child is entitled to receive EIC payments withhis or her pay during the year. To get these payments, the employeemust give you a properly completed Form W-5, ERROR MSGEarned IncomeCredit Advance Payment Certificate. You are required to make advanceEIC payments to employees who give you a properly completed Form W-5,except that you are not required to make these payments to farmworkerspaid on a daily basis. ERROR MSGCertain employees who do not have a qualifying child may be able toclaim the EIC on their tax return. However, they cannot alberghi bed and breakfast Mamaiagetadvance EIC payments. hotels BratislavaFor 2000, the advance payment can be as much as $1,412. The tablesthat begin on page 42 reflect that limit. Form W-5.Form W-5 states the eligibility requirements for receiving advanceEIC payments. On Form W-5, an employee states that he or she expectsto be eligible to claim the EIC and shows whether he or she hasanother Form W-5 in effect with any other current employer. An employee may have only one Form W-5 in effect with an employerat one time. If an employee is married and his or her spouse alsoworks, each spouse should file a separate Form W-5. accommodation in OsloFor more information, see Form W-5 or Circular E. How to figure the advance EIC payment.You must include advance EIC payments with wages you pay toeligible employees who give you a signed and completed Form W-5. FormW-5 is effective for the first payroll period ending (or the firstwage payment made without regard to a payroll period) on or after thedate the employee gives you the form. It remains in effect until theend of the year or until the employee revokes it or gives you a newone. Employees must give you a new Form W-5 each year. Figure the amount of advance EIC to include in the employee's payby using either the wage bracket or percentage method tables thatbegin on page 42. There are separate tables for employees whosespouses have a Form W-5 in effect. Note:During 2000, if you pay an employee total wages of at least$27,413, you must stop making advance EIC payments to that employeefor the rest of the year. Paying the advance EIC to employees.Advance EIC payments are not wages and are not subject towithholding of income, social security, or Medicare taxes. An advanceEIC payment does not change the amount of income, social security, orMedicare taxes you withhold from the employee's wages. You add theadvance EIC payment to the employee's net pay for the pay period. Atthe end of the year, you show the total advance EIC payments in box 9on Form W-2. Do not include this amount as wages in box 1. Employer's returns.Show the total payments you made to employees on the advance EICline (line 10) of your Form 943. Subtract this amount from your totaltaxes on line 9 (see the instructions for Form 943). Reduce theamounts reported on line 15 of Form 943 or on Form 943-A,Agricultural Employer's Tax Record of Federal Tax Liability, byany advance EIC paid to your employees. Generally, you will make the advance EIC payment from withheldincome tax and employee and employer social security and Medicaretaxes. For purposes of deposit due dates, advance EIC payments areconsidered deposited on the day you pay wages (including the advanceEIC payment) to your employees. The advance EIC payment reduces firstthe amount of income tax withholding, then withheld employee socialsecurity and Medicare taxes, and last the employer's share of socialsecurity and Medicare taxes. For more information, see Circular E. Required Notice to Employees You must notify employees who have no income tax withheld that theymay be able to claim a tax refund because of the EIC. Although you donot have to notify employees who claim exemption from withholding onForm W-4, Employee's Withholding Allowance Certificate,about the EIC, you are encouraged to notify any employees whose wagesfor 1999 were less than $30,580 that they may be eligible to claim thecredit for 1999. This is because eligible employees may get a refundof the amount of EIC that is more than the tax they owe. You will meet the notification requirement if you issue the IRSForm W-2 with the EIC notice on the back of Copy B, or a substituteForm W-2 with the same statement. You may also meet the requirement byproviding Notice 797, Possible Federal Tax Refund Due tothe Earned Income Credit (EIC), or your own statement that containsthe same wording. If a substitute Form W-2 is given on time but does not have therequired statement, you must notify the employee within 1 week of thedate the substitute Form W-2 is given. If Form W-2 is required but isnot given on time, you must give the employee Notice 797 or yourwritten statement by the date Form W-2 is required to be given. IfForm W-2 is not required, you must notify the employee by February 7,2000.