1997 Tax Help Archives  

Advance Earned Income Credit (AEIC)

This is archived information that pertains only to the 1997 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.

If you expect to qualify for the earned income credit in 1998, you may be able to start getting part of the credit with your pay now, instead of waiting until you file your 1998 tax return in 1999. This is called Advance Earned Income Credit or AEIC.

To get part of the credit with your pay, you must have at least one qualifying child, and meet certain other conditions. You cannot get the AEIC if you do not have a qualifying child, even if you will be eligible to claim the earned income credit on your 1998 return. To see if you qualify, get the 1997 Form W-5, Earned Income Credit Advance Payment Certificate, from your employer or call 1-800-829-3676.

If you qualify, complete the Form W-5 and give it to your employer. Your employer should then include part of the credit regularly in your pay.

You may have only one Form W-5 in effect with a current employer at one time. If you and your spouse are both employed, each of you should file a separate Form W-5.

If your situation changes after you give your employer Form W-5, you must give your employer a new Form W-5. For example, you should give your employer a new Form W-5 if you no longer qualify for the earned income credit or you no longer want to get advance payments of the credit with your pay.

Remember, if you receive the earned income credit with your pay during 1998, you must file Form 1040A or Form 1040 for 1998, to report the advance payments you received during the year and to take advantage of any remaining credit. You cannot use Form 1040EZ. The total of the advance payments you receive should be shown on your 1998 Form W-2.

The 1998 Form W-5 expires on December 31, 1998. If you expect to be able to claim the credit in advance for 1999, you must give a new 1999 Form W-5 to your employer.

For information on who can claim the earned income credit for 1997, see Topic 601. To get Publication 596 and Schedule EIC, call 1-800-829-3676.

If you are an employer and want more information about the advance payment and how it affects you, see Topic 754.

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