Several states require employers to notify employees that they may be eligible for the federal (and perhaps also state) Earned Income Tax Credit (EITC). This year, California law was changed to require employers to also notify employees about the California EITC recently added to the law.
AB
1847 (Chapter 294, 9/12/16) – Expands the current employee notification
requirement for the federal EITC to also include the California EITC, effective
after 2016. Per the introduction to AB 1847: “This bill would require those same employers currently
required to notify employees who may be eligible for the federal earned income
tax credit to also notify these employees that they may be eligible for the
California Earned Income Tax Credit under the same conditions.”
Amends R&T 19853, including
as follows:
(a) An employer shall notify all employees that
they may be eligible for the federal and the California EITC within one week
before or after, or at the same time, that the employer provides an annual wage
summary, including, but not limited to, a Form W-2 or a Form 1099, to any
employee. …
R&T 19854:
(a) The notice furnished to
employees regarding the availability of the federal and the California EITC
shall state as follows:
BASED ON YOUR ANNUAL
EARNINGS, YOU MAY BE ELIGIBLE TO RECEIVE THE EARNED INCOME TAX CREDIT FROM THE
FEDERAL GOVERNMENT (FEDERAL EITC). THE FEDERAL EITC IS A REFUNDABLE FEDERAL
INCOME TAX CREDIT FOR LOW-INCOME WORKING INDIVIDUALS AND FAMILIES. THE FEDERAL
EITC HAS NO EFFECT ON CERTAIN WELFARE BENEFITS. IN MOST CASES, FEDERAL EITC
PAYMENTS WILL NOT BE USED TO DETERMINE ELIGIBILITY FOR MEDICAID, SUPPLEMENTAL
SECURITY INCOME, FOOD STAMPS, LOW-INCOME HOUSING, OR MOST TEMPORARY ASSISTANCE
FOR NEEDY FAMILIES PAYMENTS. EVEN IF YOU DO NOT OWE FEDERAL TAXES, YOU MUST
FILE A FEDERAL TAX RETURN TO RECEIVE THE FEDERAL EITC. BE SURE TO FILL OUT THE
FEDERAL EITC FORM IN THE FEDERAL INCOME TAX RETURN BOOKLET. FOR INFORMATION REGARDING
YOUR ELIGIBILITY TO RECEIVE THE FEDERAL EITC, INCLUDING INFORMATION ON HOW TO
OBTAIN THE IRS NOTICE 797
OR ANY OTHER NECESSARY FORMS AND INSTRUCTIONS, CONTACT THE INTERNAL REVENUE
SERVICE BY CALLING 1-800-829-3676 OR THROUGH ITS WEB SITE AT WWW.IRS.GOV.
YOU ALSO MAY BE ELIGIBLE
TO RECEIVE THE CALIFORNIA EARNED INCOME TAX CREDIT (CALIFORNIA EITC) STARTING
WITH THE CALENDAR YEAR 2015 TAX YEAR. THE CALIFORNIA EITC IS A REFUNDABLE STATE
INCOME TAX CREDIT FOR LOW-INCOME WORKING INDIVIDUALS AND FAMILIES. THE
CALIFORNIA EITC IS TREATED IN THE SAME MANNER AS THE FEDERAL EITC AND GENERALLY
WILL NOT BE USED TO DETERMINE ELIGIBILITY FOR WELFARE BENEFITS UNDER CALIFORNIA
LAW. TO CLAIM THE CALIFORNIA EITC, EVEN IF YOU DO NOT OWE CALIFORNIA TAXES, YOU
MUST FILE A CALIFORNIA INCOME TAX RETURN AND COMPLETE AND ATTACH THE CALIFORNIA
EITC FORM (FTB 3514). FOR INFORMATION ON THE AVAILABILITY OF THE CREDIT,
ELIGIBILITY REQUIREMENTS, AND HOW TO OBTAIN THE NECESSARY CALIFORNIA FORMS AND
GET HELP FILING, CONTACT THE FRANCHISE TAX BOARD AT 1-800-852-5711 OR THROUGH
ITS WEB SITE AT WWW.FTB.CA.GOV.
Thus, AB 1847 modifies the
required notice about the federal EITC and adds the information about the
California EITC.
Effective 1/1/17.
Also see:
- EDD information on notice (not updated for AB 1847 (as of 12/12/16).
- FTB website about the EITC with link to brochure and poster.
- FTB FAQs on EITC.
- FTB Analysis of AB 1847.
- California EITC brochure.
- IRS Notice 797 on EITC.
x What do you think?
This is a pointless requirement. What about people that work multiple jobs? How would one employer determine EITC eligibility when there may be multiple W-2s to consider? If anything, this requirement would potentially cause taxpayers to overestimate their EITC eligibility.
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