00-P-013 New Tables for Earned Income Credit for 2000
|DATE:||December 13, 1999|
|SUBJECT:||New Tables for Earned Income Credit for 2000|
|EFFECTIVE DATE:||January 1, 2000|
|SUMMARY:||New Earned Income Credit Rates Effective for Paychecks Issued On or After January 1, 2000|
The Internal Revenue Service (IRS) has issued the new percentage tables for computing the advance earned income credit (EIC) payments effective for all paychecks issued on or after January 1, 2000. The attached tables have been prepared for use in computing all EIC payments for wages paid on or after January 1, 2000. When calculating EIC by annualizing, 26 pay periods should be used to arrive at an annualized amount.
The Internal Revenue Service has released the 2000 Form W-5, Earned Income Credit Advance Payment Certificate. A copy of the 2000 Form W-5 is attached; the 1999 Form W-5 expires on December 31, 1999. The new form must be filed with the employer before advance 2000 payments can begin. Generally, employees have to successfully answer questions listed on page 2 of Form W-5 in order to be eligible for advance payments. Advance EIC qualifiers must have at least one qualifying child and expect that 2000 earned and adjusted gross income will each be less than $27,413.00 (include spouses' income if filing jointly), in addition to meeting other criteria. Please note that for 2000, new rules apply to determine who is a foster child for purposes of the Earned Income Credit. In addition, employees cannot claim the EIC if planning to file either Form 2555 or 2555-EZ (relating to foreign earned income) for 2000. A nonresident alien may not claim the EIC for 2000 unless married to a U.S. citizen and elects to be taxed as a resident alien for all of 2000.
There are two employee status categories that can effect the amount of advance EIC payments: (a) single or married without spouse filing certificate, and (b) married with both spouses filing certificate. Married employees must indicate on Form W-5 if their spouse receives advance EIC payments. When updating the employee's EIC status in SHARP, please verify that the federal tax data record correctly reflects the employee's status as shown on the completed Form W-5.
The Department of Administration will be updating the existing SHARP federal tax data records on December 20, 1999, for all employees currently claiming the EIC to reflect an Earned Income Credit status of 'Not applicable'. The tax data record updates will be effective January 1, 2000. On-line agencies must enter a new effective-dated row into SHARP for employees who wish to claim the EIC in calendar year 2000; paper user agencies should submit an employee data sheet to the Division of Personnel Services for employees who wish to claim the EIC in 2000. The new tax data row should be added effective January 2, 2000. Please refer to the Employee Payroll Tax Data section of the Payroll module in the on-line CBT (Computer-Based Training) for specific instructions on entering employee tax data information.
The Division of Accounts and Reports will provide a listing to agencies which identifies all employees whose EIC status was updated in SHARP on December 20, 1999. The listing will include department, employee ID, name, SSN, and EIC exempt status.
The Department of Administration will make all of the necessary changes in the computation of EIC for SHARP agencies. Regents institutions are responsible for implementing the new EIC rates in their respective payroll systems effective with all payroll warrants issued on or after January 1, 2000.
Advance Earned Income Credit tables for paychecks issued after January 1, 2000
IRS Form W-5 (2000) - Earned Income Credit Advance Payment Certificate (.pdf)