What are your EITC obligations?

What is EITC?

eitcAn Earned Income Tax Credit (EITC) is a reduction in the amount of tax an employee owes (or an increase in income tax refunds) and it is available to certain qualified individuals. In some states, employers are required to provide specific notices to inform their employees about the EITC.

Are you aware of the Earned Income Tax Credit Notice requirements for your state or city?
If not, please read below to ensure you are compliant.

Requirements by State or City

California

The California requirement for EITC was communicated directly to our California clients last week. Here is a summary of those requirements.

Illinois

Employers must give or mail a notice regarding the EITC to employees within one week of the W-2 being distributed.  Here is the language that must appear in this notice:

IF YOU EARNED LESS THAN $39,296 LAST YEAR AND HAVE AT LEAST ONE CHILD, YOU MAY BE ELIGIBLE TO RECEIVE A TAX CREDIT FROM THE FEDERAL GOVERNMENT. THE TAX CREDIT MAY BE A REFUND FROM THE FEDERAL GOVERNMENT FOR AS MUCH AS $3,373. EVEN IF YOU DO NOT OWE FEDERAL TAXES, YOU MUST FILE A TAX RETURN TO RECEIVE THE EARNED INCOME TAX CREDIT. BE SURE TO FILL OUT THE EARNED INCOME TAX CREDIT FORM IN THE TAX RETURN BOOKLET.

Maryland

The Maryland Comptroller sends a letter to all Maryland employers at the end of each year which outlines the figures for the EITC eligibility. Employers are then required to send this to all eligible employees before the end of the year. In case you forgot to do that this year, here is a copy of the letter from the Comptroller and the sample notice for employees.

New Jersey

Employers are required to provide a notice of the New Jersey Earned Income Tax Credit (NJEITC) to potentially eligible employees between Jan 1 and Feb 15th each year. Here is a link to the notice.

Louisiana

Business establishments in Louisiana with 20 or more employees are required to provide a notice to employees at the time of hiring. Here is a link to the required notice.

Philadelphia

Employers must provide Philadelphia residents with the ETIC notice at the time that the W2 is given out.  A sample notice (in various languages) can be found here.

Texas

No later than March 1st of each year, employers must notify their employees of the Federal EITC. The notice can be given in person, electronically, through a flyer, or by mail. Employers may use the Federal IRS Notice 797 or they can create a written statement with the same wording.

Virginia

Employers are required to hang the EITC notice with all of the other State and Federal Labor Law posters. Employers can find the required poster here.

If you are a StratEx client and have any questions about these requirements, please reach out to your HR Account Manager or your StratEx Service Team.

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