How do I figure the amount of advance earned income credit to include in an employees pay?
A. To figure the credit amount, use either the Tables for Percentage Method or Tables for Wage Bracket Method of Advance EIC Payments which are located in Publication 15, Circular E, Employer’s Tax Guide. Add the advance earned income credit payments to the employee’s net pay for the pay period. Since the EIC isn’t wages, you do not withhold any income, social security, or Medicare taxes from the payment. For additional information, refer to Tax Topic 754, Form W-5 – Advance Earned Income Credit and/or Publication 15, Employer’s Tax Guide.
