California Employers Must Provide Written Earned Income Tax Credit Notice
Effective January 1, 2008, California employers are required to provide all employees
with written notice of their possible right to an Earned Income Tax Credit on their federal
income tax returns. Legislative sponsors felt the measure, Assembly Bill 650, was
necessary because "hundreds of millions of federal dollars go unclaimed by the working
poor in California" since few eligible employees participate in the federal earned income
tax credit program.
Earned Income Tax Credit eligibility is based on an individual's adjusted gross income.
To qualify for earned income tax credit for the 2007 tax year, an individual's adjusted
gross income must be less than $37,783, with two or more qualifying children, $32,241,
with one qualifying child, or $12,590, with no qualifying children.
To comply with the statute, an employer must hand-deliver or mail a written notice to all
employees (defined as any person who is covered by unemployment insurance by his or
her employer, under the California Unemployment Insurance Code). The notice must be
provided within one week (whether before, after or at the same time) of when the
employer provides the employee with an annual wage summary, such as W-2 or 1099
Forms. The required notice must state:
BASED ON YOUR ANNUAL EARNINGS, YOU MAY BE ELIGIBLE TO RECEIVE
THE EARNED INCOME TAX CREDIT FROM THE FEDERAL GOVERNMENT.
THE EARNED INCOME TAX CREDIT IS A REFUNDABLE FEDERAL INCOME
TAX CREDIT FOR LOW-INCOME WORKING INDIVIDUALS AND FAMILIES. THE
EARNED INCOME TAX CREDIT HAS NO EFFECT ON CERTAIN WELFARE
BENEFITS. IN MOST CASES, EARNED INCOME TAX CREDIT PAYMENTS WILL
NOT BE USED TO DETERMINE ELIGIBILITY FOR MEDICAID, SUPPLEMENTAL
SECURITY INCOME, FOOD STAMPS, LOW-INCOME HOUSING OR MOST
TEMPORARY ASSISTANCE FOR NEEDY FAMILIES PAYMENTS. 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 FEDERAL INCOM