As of January 1, 2008, California employers are required to provide all employees with notification of the Earned Income Tax Credit (EITC).

The EITC Notice informs employees that they may be eligible for a tax credit from the federal government based on their earned income. This is a refundable federal income tax credit that applies to low-income employees and their families that has no effect on some welfare benefits. The EITC eligibility is based on adjusted gross income.

The EITC may not necessarily be used to determine Medicaid eligibility, or eligibility for supplemental security income, food stamps, low-income housing, or housing assistance. However, employees need to file a tax return even if they do not owe federal taxes in order to take advantage of the tax credit.

The EITC Notice should contain information about how employees can obtain notices from the IRS, including Notice 797 and Form W-5.

Notification Requirements

Employers should provide employees with EITC notification at the time of, or within one week, of providing employees with their annual wage summary (IRS Form W-2 or 1099). Employers must provide employees with this notification either in person or by mailing it to the employee’s mailing address. Employers should not simply post the notification on a bulletin board, as they can with some other notifications.

All employees in California should receive this notification from their employers, even if they are not covered by the notification.