Now that W-2 season is upon us, it is important that you notify certain employees about their eligibility to the Earned Income Credit. As per the IRS:

Employers “must notify employees who have no federal income tax withheld that they may be able to claim a tax refund because of the EIC. Although you don’t have to notify employees who claim exemption from withholding on Form W-4 about the EIC, you are encouraged to notify any employees whose wages for 2015 were less than $47,747 ($53,267 if married filing jointly) that they may be eligible to claim the credit for 2015. This is because eligible employees may get a refund of the amount of EIC that is more than the tax they owe. You will meet this notification requirement if you issue the employee Form W-2 with the EIC notice on the back of Copy B, or a substitute Form W-2 with the same statement. You will also meet the requirement by providing Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC), or your own statement that contains the same wording. If a substitute for Form W-2 is given to the employee on time but doesn’t have the required statement, you must notify the employee within 1 week of the date the substitute for Form W-2 is given. If Form W-2 is required but isn’t given on time, you must give the employee Notice 797 or your written statement by the date Form W-2 is required to be given. If Form W-2 isn’t required, you must notify the employee by February 8, 2016.”

Methods used to provide this notification:

  • A quality W-2 statement,  such as the ones used by Time & Pay. It will be printed on the back of the form.
  • IRS Form 797
  • A self printed notification. You can print out the notification below to give to your employees.

The notification reads:

Earned income credit (EIC). You may be able to take the EIC for 2105 if your adjusted gross income (AIG) is less than a certain amount. The amount of credit is based on income and family size. Workers without children could qualify for a smaller credit. You and any qualifying children must have valid social security numbers (SSN’s). You cannot take the EIC if your investment income is more than a specified amount for 2105 or if income is earned for services provided while you were an inmate at a penal institution. For 2015 income limits and more information, visit Also see Pub. 596, Earned Income Credit. Any EIC that is more than your tax liability is refunded to you, but only if you file a tax return. 


About Time & Pay:

Time & Pay is a professional payroll service provider located in Johnson City, TN. We service businesses of all sizes and types throughout the United States. Founded in 1992, Time & Pay provides businesses with complete payroll services , guaranteed payroll tax compliance, automated time and attendance systems and services, pay-as-you-go worker’s comphuman resource management systems and services, and more. We provide our customers with the cost effective tools you need to better manage your payroll, your employees and your business. Time & Pay’s services guarantee you will save money, time and aggravation and we back them up with the customer service you expect and deserve. Contact Us today to learn why business owners throughout the country are saying:

“Time & Pay! Why would you do payroll and timekeeping any other way?”

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