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Advance Earned Income Tax Credit
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Want extra money in each paycheck?

If you will be earning less than $26,473 in 1998 and have at least one child living with you, this information may be for you.

Ask your employer about the Advance Earned Income Tax Credit

A Tax Credit

Have you heard about the Earned Income Tax Credit (EITC)? Ifs a tax credit for certain employees that may reduce the tax they owe. EITC is subtracted from the amount of tax you owe, so you end up paying less tax or you may get a refund. Even if you don't usually file a tax return - because you don't owe taxes or you don't earn enough money to have to file - you may still be able to get the credit.

Two Ways to Claim the Credit

There are two ways you can get the credit. You can get it all when you file your tax return next year or you may receive a part of it in your paychecks by having the EITC paid to you "in advance." To get the advance payment you must expect to earn less than S26,473 in 1998 and have at least one child living with you in the U.S.

Advance EITC Payment

To find out if you are eligible to get the Advance EITC payment, complete the questions on the back of the attached Form W-5, Earned Income Credit Advance Payment Certificate.

If you find out you qualify, give the bottom part of the form to your employer. Then, based on what you earn, your employer adds an additional amount of money (a portion of the EITC) to your take-home pay throughout the year. If your only income is from self-employment, you cannot qualify for the Advance EITC payment.

If at any time during the year your circumstances change - your income rises above the dollar limit or you find you are no longer eligible to receive the EITC - you must fill out a new Form W-5 and give it to your employer to stop the advance payment. When you file your next return, you will have to repay any amount advanced to you for which you weren't qualified to receive.

Filing a Tax Return

If you receive the Advance EITC in your pay, you must file a tax return. This will show the IRS the payments you received and will allow you to apply for any extra credit you may be entitled to.

Where can I get more information on EITC and Advance EITC?

Publication 596, Earned Income Credit, explains the rules to qualify for and to claim the EITC and Advance EITC. Call the Internal Revenue Service at 1-800-829-3676 to get a free copy of any IRS form and/or publication.

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This publication is available from the Internet through the World Wide Web:
www.irs.ustreas.gov

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