New Law Eliminates Form W-5, Earned Income Credit Advance Payment Certificate

On August 10, 2010, President Obama signed the Edu­cation Jobs and Medicare Assistance Act into law. The Act repeals the Advanced Earned Income Credit (AEIC), effec­tive with tax year 2011.

Prior to the newest legislation, employees who were eli­gible for the Earned Income Credit (EIC) could elect to receive advance payments of EIC through their paycheck based on IRS wage-bracket and percentage method tables. This Act only eliminates advance payments; employees who qualify for the EIC will still be able to claim the credit at the end of the year on their personal income tax return when filing their IRS Form 1040, U.S. Individual Income Tax Return.


n Administrative and managerial employees must not provide tax advice to employees.

n IRS Form W-5, Earned Income Credit Advance Pay­ment Certificate, should not be accepted from employees, effective Pay Period 01-11. Pay Period 26-10 will be the last pay period that advance pay­ments will be made.