Earned Income Credit Advance Payments

The EIC is a tax credit for employees whose income falls below a certain level, and those who meet the requirements may receive advance EIC payments with their pay during the year. For deposit purposes, these advance payments reduce withheld income taxes and employee and employer FICA taxes, thereby reducing the 501(c)(3)’s total tax liability.

To qualify for advance EIC payments, employees need to give a completed Form W-5, Earned Income Credit Advance Payment Certificate, to the 501(c)(3), which must retain it for its records.

Your 501(c)(3) can use the advance EIC tables in Publication 15 (CircularE), Employer’s Tax Guide, to determine the correct amount of EIC advance payment.

More information on EIC advance payments