Several states require that employers give tax notices to employees regarding their possible eligibility for the Earned Income Tax Credit (EITC, or EIC). The tax notice is typically IRS Notice 797, although you can give alternative notifications.
EITC is a benefit for working people who make low to moderate income. The credit reduces these individuals’ tax liabilities. EITC is available as a lump sum when employees file their income tax return each year.
Does the IRS require that you provide an EITC notice?
The IRS requires that employers notify employees who don’t have federal income tax withheld about the Earned Income Tax Credit.
You are not required to notify employees who claimed a tax exemption on Form W-4.
The IRS requires that you give the eligible employee one of the following notices:
- Form W-2, Copy B, which has the required EIC information on the back
- Substitute Form W-2 with the same EIC information on the back
- Notice 797, Possible Federal Tax Refund Due to the Earned Income Credit (EIC)
- A written statement with the same wording as Notice 797
Which states require that you provide an EITC notice?
Employers in certain states must give employees a notice about the EITC. Usually, you need to give the notice and Form W-2 to your employees around the same time. You can find a copy of the notice on Form W-2, but you must also distribute a state-required form about the EITC.
Here are the states that require you to give the EITC notice to your employees:
- California
- Colorado
- Illinois
- Louisiana
- Maine
- Maryland
- New Jersey
- Oregon
- Texas
- Virginia
Keep in mind that Philadelphia, Pennsylvania also requires employers to provide a notice to all employees about the EITC.
California
California requires that employers who are subject to and required to provide unemployment insurance must provide the EITC notification to employees.
Send the EITC notice within one week before, after, or during the time you provide an annual wage summary (e.g., Form W-2 or Form 1099-NEC).
For more information, go to California’s Year-End Notification Requirements page.
Colorado
Colorado requires that employers provide an EITC notice annually to all employees who receive annual income tax documents.
For more information, go to Colorado’s Notice of Federal and State Refundable Tax Credits PDF.
Illinois
Give the EITC notice to all employees annually, unless an employee receives gross wages that exceed the maximum amount they’d qualify for the federal earned income tax credit.
Send the EITC notice within one week before, after, or during the time you provide employees with W-2s.
You can view more information here.
Louisiana
Louisiana employers must notify new hires that earn below the state threshold of the potential availability of EITC.
You must display the Louisiana EITC notice poster (which contains the annual threshold) in your business.
Maine
Notify employees about potential EITC by posting a notice, provided by the state Bureau of Labor, where employees can see it.
Maryland
You must notify your eligible employees about the EITC by December 31. You can provide an electronic or written notice. Learn more here.
New Jersey
In New Jersey, you must provide the EITC notice to potentially eligible employees between January 1 and February 15 of each year. See New Jersey’s employer instructions.
Oregon
All Oregon employers must notify employees about the Earned Income Tax Credit. You must at least provide a written notice along with Form W-2 each year. For more information, go to Oregon’s website.
Texas
You must provide an EITC notice to employees by March 1 of each year. You may use Notice 797 or a written statement with the same wording.
See the Texas Workforce Commission website for more information.
Virginia
In Virginia, you must post the EITC notice poster in your business where employees can read it. For more information, check out Virginia’s website.
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This article has been updated from its original publication date of January 29, 2016.
This is not intended as legal advice; for more information, please click here.
