If you expect to qualify for the earned income credit for the current year,
you may be able to start getting part of the credit with your pay now, instead
of waiting until you file your current year tax return. 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 the current year, 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 current year tax return. To
see if you qualify, ask your employer for the current year 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
must 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, 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 the current year,
you must file Form 1040A (PDF) or Form 1040 (PDF) for the current year to report the advance payments you received
during the year and to take advantage of any remaining credit. You cannot
use Form 1040EZ. The total of the advance payments you receive will
be shown on your current year Form W–2.
The current year Form W–5 expires on December 31, of the
current year. If you expect to be able to claim the credit in advance for
the following year, you must give a new completed Form W–5 which
is vaild for that year to your employer.
For information on who can claim the EIC for 2005, refer to Topic 601, Publication 596 and Form 1040, Schedule EIC (PDF).
If you are an employer and want more information about the advance payment
and how it affects you, refer to Topic 754.
