Earned Income Credit (EIC)
The Revenue Reconciliation Act of 1993 expanded the earned income tax credit for tax years beginning after 1993. The expanded credit extends availability to individuals without children and increases the credit percentages, phase out percentages, earned income amounts, and phase out amounts. The supplemental young child credit and the supplemental health insurance credit were repealed.
The earned income and phase out amounts are adjusted for inflation for tax years beginning after December 31, 1993. For 2007, the maximum amount of the credit is $1,712 for a single person or married person without spouse filing certificate.
The amount of the advance payment is determined from tables provided by the IRS, which take into account the amount of wages and whether or not an employee's spouse is also claiming advance payments. Employers should not treat the advance payments as compensation but should offset them against their liability for withheld income taxes and for FICA taxes.
Employees who wish to receive advance payment of the credit must submit Form W-5 (Earned Income Credit Advance Payment Certificate) to their employer annually.
