03-P-028 New Tables for Earned Income Credit for 2003 (Supersedes 02-P-029)
|DATE:||December 13, 2003|
|SUBJECT:||New Tables for Earned Income Credit for 2003|
|EFFECTIVE DATE:||January 1, 2003|
|CONTACT:||Roger Basinger||(785) firstname.lastname@example.org|
|SUMMARY:||New Earned Income Credit Rates Effective for Paychecks Issued On
or After January 1, 2003
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, 2003. The attached tables have been prepared for use in computing all EIC payments for wages paid on or after January 1, 2003. When calculating EIC by annualizing, 26 pay periods should be used to arrive at an annualized amount.
The Internal Revenue Service has released the 2003 Form W-5, Earned Income Credit Advance Payment Certificate. A copy of the 2003 Form W-5 is attached; the 2002 Form W-5 expires on December 31, 2002. The 2003 Form W-5 must be filed with the employer before advance 2003 payments can begin. Generally, employees have to successfully answer questions listed on page 2 on Form W-5 in order to be eligible for advance payments. In addition to meeting other criteria, advance EIC qualifiers must have at least one qualifying child and expect that 2003 earned and adjusted gross income will each be less than $29,666.00 for single employees or $30,666.00 if filing jointly (include spouses income if filing jointly). Employees cannot claim the EIC if planning to file either Form 2555 or Form 2555-EZ (relating to foreign earned income). Finally, a nonresident alien may not claim the EIC for 2003 unless married to a U.S. citizen or resident and elects to be taxed as a resident alien for all of 2003.
The IRS has established the following three employee status categories: (a) Single or Head of Household, (b) Married Without Spouse Filing Certificate, and (c) Married With Both Spouses Filing Certificate. Married employees must indicate on Form W-5 if their spouse receives advance EIC payments.
The Department of Administration will update the existing SHARP federal tax data records on December 16, 2002, for all employees claiming the EIC in 2002 to reflect an Earned Income Credit status of 'Not applicable'. The tax data record updates are effective January 1, 2003. On-line agencies must enter a new effective-dated row into SHARP for employees who wish to claim the EIC in calendar year 2003; paper agencies should submit an employee data sheet to the Division of Personnel Services for employees who wish to claim the EIC in 2003. The new tax dated row should be added effective January 2, 2003 and will need to be entered into SHARP by 6:00 p.m. on Friday, December 27, 2002 in order to be reflected in the on-cycle paycheck dated January 3, 2003. 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 SHARP employees whose EIC status was updated in SHARP on December 16, 2002. The listing includes 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. Regent's institutions are responsible for implementing the new EIC rates in their respective payroll systems.
Attachment: Advanced Earned Income Credit Formulas
W-5 Earned Income Credit Advance Payment Certificate (.pdf)