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California Notice of Availability of Earned Income Tax Credit (EITC)
California law requires employers to inform all employees that they may be eligible for the California Earned Income Tax Credit and the Federal Earned Income Tax Credit. California Employee Tax Information/EITC Information Booklet (“Booklet”), which includes all mandatory ETIC notices, can be distributed to employees at the same time as the employer provides employees’ annual wage summary (W-2 or Form 1099).
When and How Notice is Provided
The EITC notice:
- must be provided within one week before or after, or at the same time, that the employer provides an annual wage summary, including, but not limited to, a Form W-2 or a Form 1099, to any employee
- must be handed directly to the employee or mailed to the employee’s last known address
- requirement cannot be satisfied by simply posting the notice on an employee bulletin board or sending it through office mail
California EITC Notice
The content of the California EITC Notice is prescribed in R&T § 19854(a). The California EITC Notice describes the general availability of both the Federal EITC credit and State EITC credit to eligible employees, information about claiming the credit on federal and state tax returns and instructions on how to obtain notices from the Internal Revenue Service (IRS) and the Franchise Tax Board (FTB).
Federal EITC Notice
California employers are required to provide employees with information regarding their eligibility to receive the Federal EITC, including the information provided in IRS Notice 797. The Booklet includes the full text of the current Notice 797. Notice 797 includes the tax credits an eligible employee could receive given the number of qualifying children the employee has, how to claim the credit, tax preparation and filing information, and how to obtain additional information from the IRS.
IRS Qualifying Child Rules
The Booklet also contains a detailed explanation of the rules that determine whether an employee qualifies for a greater tax benefit based on the number of qualifying children the employee has. The qualifying factors are: (1) relationship, (2) age, (3) residency and (4) joint return. The Booklet also contains the IRS’ explanation of the “tie-breaker” rules that apply when a child is a qualifying child of more than one person.
