Kansas Department of Administration, Office of General Services
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INFORMATIONAL CIRCULAR NO. 08-P-018   Supersedes 07-P-016
DATE:  December 12, 2007
SUBJECT: New Advance Earned Income Credit Tables for 2008
EFFECTIVE DATE:   January 1, 2008
A & R CONTACT: Sunni Zentner  (785) 296-7058     (sunni.zentner@da.ks.gov)
APPROVAL: Kent E. Olson
SUMMARY: New Advance Earned Income Credit Tables Effective for Paychecks Issued on or After January 1, 2008

The Internal Revenue Service (IRS) has issued the new percentage tables for computing the advance earned income credit (EIC) payments effective for 2008. The attached tables are to be used in computing all advance EIC payments for wages paid on or after January 1, 2008. In order to use the attached tables, income must be annualized. When annualizing income to calculate the advance EIC, multiply federal taxable income for the current bi-weekly pay period by the twenty-six pay periods in the year.

The IRS has also released the 2008 Form W-5 – Earned Income Credit Advance Payment Certificate. The 2008 form can be obtained on the IRS website at http://www.irs.gov/pub/irs-pdf/fw5.pdf. The 2007 Form W-5 expires on December 31, 2007. The 2008 Form W-5 must be filed with the employer before advance 2008 payments can begin. Generally, employees have to successfully answer questions listed on page 2 of Form W-5 in order to be eligible for advance payments. In addition to meeting other criteria, advance EIC qualifiers must have at least one qualifying child and expect that 2008 earned and adjusted gross income will each be less than $33,995.00 for single employees or $36,995.00 if filing jointly (include spouse’s income if filing jointly). Employees cannot claim the EIC if planning to file either Form 2555 or Form 2555-EZ (relating to foreign earned income). Finally, a nonresident alien may not claim the advance EIC for 2008 unless married to a U.S. citizen or resident and elects to be taxed as a resident alien for all of 2008.

The IRS has established the following three employee status categories: (a) Single or Head of Household, (b) Married Without Spouse Filing Certificate, and (c) Married With Both Spouses Filing Certificate. Married employees must indicate on Form W-5 if their spouse receives advance EIC payments.

An e-mail notification was sent on December 3, 2007 to all SHARP employees receiving advance EIC payments in 2007. The notification reminded employees that a new Form W-5 must be submitted to continue the advance EIC payments in 2008. The notification was sent to the employee’s email address listed under ‘Update My Profile’ in the Employee Self Service Center at https://sharp.state.ks.us/servlets/iclientservlet/ess/?cmd=login. Agencies will need to distribute notifications to their employees who lack an individual e-mail address.

Agency personnel have until 6:00 p.m. on December 21, 2007 to update SHARP with the new EIC information for all employees who submit a new paper Form W-5 for 2008. It is important that agency personnel check the ‘New W-5 Received’ radio button on the employee’s ‘Federal Tax Data 2’ page for the new effective-dated row that is entered.

The KPAY320 will process in the batch cycle generated the evening of December 21, 2007. This process will search for employees who were sent a W-5 notification. If a new W-5 has not been received, a January 1, 2008 effective-dated row will be inserted in the employee’s Tax Data record with an EIC status of ‘Not Applicable’. (Please note the KPAY320 process will also update all employees claiming exemption from withholding tax in 2007, if a new W-4 has not been received. The update will place a January 1, 2008 effective-dated row in the employee’s tax record with a marital status of ‘single’ and zero exemptions.)

For any Forms W-5 for 2008 (or Forms W-4 for 2008 for employees claiming exemption from withholding) received between December 21, 2007 and January 1, 2008, agency personnel will need to enter the data with a January 2, 2008 effective date. The data will need to be entered into SHARP by 6:00 p.m. on Friday, January 4, 2008 in order to be reflected in the on-cycle paycheck dated January 11, 2008. Please refer to the Employee Payroll Tax Data section of the Payroll module in the on-line CBT (Computer Based Training) for specific instructions on entering employee tax data information and worklist maintenance.

The KPAY320 creates a report (by SHARP agency) that identifies all agency employees whose exempt withholding and/or EIC status was updated in SHARP on the night of December 21, 2007. The report will be available in the agency directory on the MVS on Wednesday, December 26.

The Department of Administration will make all of the necessary changes in the computation of the advance EIC for SHARP agencies. Regent’s institutions are responsible for implementing the new advance EIC rates in their respective payroll systems.


Attachment: Advance Earned Income Credit Formulas PDF