If you expect to qualify for the earned income credit in 2002, you may
be able to start getting part of the credit with your pay now, instead of
waiting until you file your 2002 tax return in 2003. This is called Advance
Earned Income Credit or Advance EIC.
To receive part of the credit with your pay, you must expect to have at
least one qualifying child for 2002, expect to fall within certain income
limits, and expect to meet certain other conditions. You cannot get the Advance
EIC if you do not expect to have a qualifying child, even if you expect to
be eligible to claim the EIC on your 2002 return. To see if you qualify, ask
your employer for the 2002 Form W-5 (PDF), Earned Income Credit Advance Payment Certificate.
If you qualify, complete Form W-5 and give it to your employer.
Your employer will then add the advance earned income credit to your net pay
each pay period you are eligible.
You may have only one Form W-5 in effect with a current
employer at one time. If you and your spouse are both employed, each of you
should file a separate Form W-5.
If your situation changes after you give your employer Form W-5,
you must give your employer a new Form W-5. For example, you
should give your employer a new Form W-5 if you no longer expect
to qualify for the EIC or you no longer want to get advance payments of the
credit with your pay.
Remember, if you receive the EIC with your pay during 2002, you must file Form 1040A (PDF) or Form 1040 (PDF)
for 2002 to report the advance payments you received during the year and to
take advantage of any remaining credit. You cannot use Form 1040EZ (PDF). The total of the advance payments you receive will be shown
on your 2002 Form W-2.
The 2002 Form W-5 expires on December 31, 2002. If you expect
to be able to claim the credit in advance for 2003, you must give a completed
2003 Form W-5 to your employer.
For information on who can claim the EIC for 2001, select Tax Topic 601, Publication 596 (PDF) and Form 1040 (PDF) Schedule EIC.
If you are an employer and want more information about the advance payment
and how it affects you, select Tax Topic 754.
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