W-5 Form

A W-5 Form, also known as an Earned Income Credit Advance Payment Certificate, was a tax document previously used by the IRS that allowed eligible employees to receive part of their earned income credit (EIC) in advance through payroll. This form was discontinued in 2010.

What is used instead of the W-5 Form?

There’s no replacement form for receiving the credit through advance payroll. Instead, eligible taxpayers must claim the Earned Income Tax Credit (EITC) when filing their annual tax return using Form 1040. By moving the process to tax time, the IRS streamlined compliance, minimized errors, and ensured the credit was accurately calculated as a single lump sum.

Can an employee still claim the Earned Income Tax Credit?

Yes, employees can still claim the Earned Income Tax Credit (EITC). Eligibility is based on factors such as income level, filing status, and the number of qualifying children. Those who qualify must file a federal tax return, typically using Form 1040 and including Schedule EIC if they have children. The maximum credit amount is set by the IRS and may change from year to year.

How did the W-5 Form affect tax credits?

Filing a W-5 Form allowed employees to receive advance payments of their EIC throughout the year. If employees received more than they were entitled to, they were required to pay back the excess when filing their tax return.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.