© 2023 American Payroll Institute, Inc. State and Local Earned Income Tax Credit Notice Requirements Employers must comply with federal and state requirements to send notices about the Earned Income Tax Credit (EITC), even though employees no longer receive advance payments of the credit as of 2011 (see The Payroll Source®, §6.6). The IRS has released the tax year 2022 EITC income limits and maximum credit amounts. Eight states and one city require notice Eight states and one city require employers to provide separate EITC notifications to their employees, in addition to the required federal notice (see APA’s Guide to State Payroll Laws, Table 4.3): In California, the notice must be given within one week before or after, or at the same time that the employer provides a Form W-2 to the employee. A sample notice is available on the California Employment Development Department website. Employers also are required to notify employees regarding the state EITC. The language of the state EITC notice is included in California law, and it is similar to the sample already mentioned. State EITC information is available on the California Franchise Tax Board website. There is also a webpage dedicated to the state EITC with more information for employees. In Illinois, the notice must be given within one week before or after, or at the same time that the employer provides a Form W-2 to the employee. A sample notice is contained in Illinois law (820 ILCS §170/20). The notice must be updated annually to reflect the maximum EITC and the maximum earnings to which such tax credit will apply. Information is also available on the Illinois Department of Human Services website. In Louisiana, any business establishment that has 20 or more full-time or part-time employees must provide the notice to employees at the time of hiring. The Louisiana Workforce Commission provides an Earned Income Credit poster on its website. The new tax year 2022 poster is now available. In Maryland, the notice must be given by December 31 of each year. Employers may develop their own notice or use a sample notice provided by the Maryland Comptroller’s Office (see Maryland Employer Withholding Tax, Tax Alert 22-10, for a sample notice). In New Jersey, the notice must be given to potentially eligible employees between January 1 and February 15 of each year to coincide with the employer’s distribution of Forms W-2. The written notification must use the statement developed by the State Treasurer, which is available online and has been updated for tax year 2022. In Oregon, notice must be given annually with the employee’s federal Form W-2. Sample language and a template are available from the Oregon Bureau of Labor and Industries on its website. In Texas, the notice must be given no later than March 1 of each year. The Texas Workforce Commission provides information about EITC notification on its website. In Virginia, the notice must be posted in the same location where other employee notices required by state or federal law are posted. The Virginia Department of Social Services provides employer posters and other information on its website. City requirement. A notice must be given to all employees and independent contractors who live or work in Philadelphia, Pennsylvania, at the same time that the employer provides a Form W-2 to the employee. A sample notice and an official flyer are available on the Philadelphia Department of Revenue website and have been updated for tax year 2022. State Electronic and Magnetic Media W-2 Reporting Deadlines Under federal law, employers that file 250 or more Forms W-2, Wage and Tax Statement (Copy A), must file them electronically by January 31 after the year to which the form applies. The Social Security Administration does not accept Form W-2 data reported on magnetic media. Electronic filing threshold for forms due in 2023 For states that follow the federal filing threshold, the threshold remains 250 for forms due in 2023. The Taxpayer First Act of 2019 lowered the electronic filing threshold to 100 Forms W-2 for calendar year 2021 and then to 10 thereafter. However, the IRS must issue appropriate regulations before such actions will be required. In July 2021, the IRS issued proposed regulations that would lower the threshold to 100 returns for tax year 2022 (returns for 2021 filed in 2022) and to 10 returns beginning January 1, 2023. These regulations have not been finalized and are not yet in effect. This means that for 2022 forms due in 2023, the threshold remains 250. Some states have revised their filing instructions to remove language specifically referring to the 250-form threshold, in anticipation of a future reduction. Most states also require Forms W-2 that are filed electronically or on magnetic media to be filed by January 31 or in February. The remaining 11 states either do not require Forms W-2 to be sent to them (California and New York) or do not have a state income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, January 23, 2023 Volume 25 Issue 2
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