How is the Earned Income Credit Paid?
Eligible employees who wish to receive ADVANCE payments of the Earned Income Credit must submit a completed Form W-5 to their employer. There are three tables for determining the applicable advance payment amount. For 2007, the payment tables are identified as:
- Single, Head of Household and Qualifying Widow(er)
- Married Filing Jointly with spouse not filing a Certificate (Form W-5), and
- Married Filing Jointly with spouse also filing a Certificate.
The maximum ADVANCE payment a qualified Earned Income Credit recipient may receive is $1,712, compared to $1,648 in 2006. (Single or Married Without Spouse Filing Certificate). The remaining amount of credit can be claimed by the employee on his or her annual tax return (Form 1040). For married employees who jointly file Form 1040, and each file Form W-5 with their respective employer, the 2007 ADVANCE payment limit for each spouse is $856.
However, to qualify for ADVANCE payments, a JOINT filer must have one qualified child and expect to have earned income and adjusted gross income of less than $35,241 for 2007. For a non-joint filer to qualify for ADVANCE payments, he or she must have at least one qualified child and expect 2007 earned income and adjusted gross income of less than $33,241. For two or more qualifying children, to qualify the expected 2007 earned income and adjusted gross income must each be less than $37,783 ($39,783 if married filing jointly).